Why gas is more expensive even though the price of oil has remained steady

A recent spike in gas prices has Winnipeggers feeling pain at the pumps but the latest jump comes despite the price of oil remaining relatively steady.

That has many wondering why they’re paying more.

Experts said it’s due to refinery outages and some expect the price hike won’t last very long but that’s little comfort for people and businesses who’ve been dealing with volatility at the pumps.

With the price hovering around $1.85 per litre, up around $0.15 since last week, drivers filling up their tanks are feeling sticker shock.

“Well, like everybody else a little upset but we have to do what we have to do,” said Pete Coss, after filling up his van. “We gotta get to work, we gotta get home, we gotta go pick up stuff so we deal with it, I guess.”

Except this time around, experts said fluctuations in the price of oil can’t be blamed, with the cost hovering around the US$80 per barrel mark.

Werner Antweiler, a professor at the University of British Columbia’s Sauder School of Business, told CTV News Winnipeg this spike is due to refinery outages — some scheduled, others due to technical problems.

“The good news is that this temporary price spike won’t last very long,” Antweiler said in an email. “Notice that diesel prices have not gone up, because there appears to be still sufficient inventory. We can expect prices to ease in the next two to three weeks.”

It’s not just Winnipeg, prices have surged across the country, according to the Canadian Automobile Association (CAA).

In B.C., prices rose to $2.35 per litre in Vancouver, while Toronto is seeing gas go for an average of $1.52 per litre.

“There’s a lot that goes into the price of gas,” said Teresa Di Felice, assistant vice president of government and community relations at CAA. “Crude oil doesn’t always translate into the issues of what we’re actually experiencing at the pump.”

Winnipeggers were paying around $1.69 last week. This latest spike has hit hard, especially for businesses in the transport sector.

“Our customers depend on us for reliable, consistent and affordable pricing and so we’ve actually been consuming a lot of the fuel costs ourselves in order to continue to provide that service they’ve come to depend on,” said Evan Martin, vice president of Calculated Moving.

He said their fuel prices have nearly doubled since early in the pandemic when the cost of gas dropped amid decreased demand. It accounts for about 50 per cent of the company’s overall costs. It’s now impacting the business’s ability to grow and electrify their fleet of trucks.

“Previously that wasn’t really something that was on our radar but now that we’ve seen how much fuel can actually play an impact in our day-to-day costs that’s definitely something that we’ve come to consider going forward as the technology continues to evolve,” Martin said.

He’s also noticing customers changing the way they live due to swings in fuel prices.

“We’ve seen people actually end up moving closer to the core areas to rely more on different transit methods: biking, walking, rapid transit, stuff like that,” Martin said. “We’ve actually seen a lot of our customers locating to a place where they’re moving away from independent fuel use.”

Martin said the price of gas is also affecting employees. He said the company’s trying to be more flexible by arranging to pick up some workers from home instead of having them drive out to their compound just west of Winnipeg to start work.

Coss said for him it’s just a matter of being more efficient with his trips when he does choose to drive.

“You start figuring everything out and taking time and making sure everything is done on a routine so you’re not backtracking too much,” he said.