Gas prices set to rise further as war in Ukraine and Russian sanctions drive market volatility

A remarkable rise in fuel prices on Friday is causing problems at the pumps for residents of all the Maritime provinces.

“Sometimes when prices go this high, you think about where you want to go – and where you can actually go,” Al Birthwright said while fueling up in Halifax.

In New Brunswick, the price of regular self-serve jumped eight cents per liter to a peak price of 171.8 cents. Diesel also increased; the current maximum price is now 191.3.

In Nova Scotia Zone One, regular self-serve jumped more than 10 cents, now selling at a low of 166.6 cents per litre. Diesel in the Halifax area also rose to a minimum price of 183.7 cents.

In Prince Edward Island, the maximum price for gasoline has risen to 172.7 per liter for regular self-serve, and diesel is selling at a low of 166.6.

The Nova Scotia Utilities and Review Board (NSUARB) will invoke its shutdown clause on Friday evening to adjust the price of gasoline to reflect price changes in the global oil market.

The blackout clause is a mechanism available to utility boards to respond to sudden and significant increases or decreases in the price of petroleum products.

The clause has already been used in Nova Scotia and New Brunswick this week to raise gas prices.

All three Maritime provinces have gas regulators who set prices at the pump with unique formulas for each province.

In Nova Scotia, the NSUARB sets prices every Thursday and uses a formula based on current prices on the New York Mercantile Exchange.

“We pay attention to the daily price, then we convert it from the US dollar to the Canadian dollar, and that becomes the basis of our pricing here,” said NSUARB executive director Paul Allen.

Dan McTeague of Canadians for Affordable Energy says he expects the price of gasoline in the region to rise by 11 cents overnight, and diesel by 14 cents.

“If you didn’t move yesterday, you’ll want to move today to take advantage before price kicks in,” McTeague said.

Gas pricing expert Vijay Muralidharan, senior consultant at Kalibrate Canada, says Russia’s war on Ukraine is contributing to skyrocketing gas prices.

“Russia produces 10-12% of global crude demand and exports more than four million barrels of crude,” Muralidharan said. “We have learned from other sources that this four million has decreased by 1.5 million barrels.”

He says it’s a blow to the world’s crude oil supply.

Canada imports almost no crude oil from Russia, but prices reflect global supply.

With Russian exports plummeting due to war and economic sanctions, this means countries are now competing with each other and looking for new supply partners, driving up the price of oil.

“You’re looking at 60-70% crude appreciation out of nowhere,” Muralidharan said.

The rising price of the average barrel of oil not only means getting pinched at the pump, but also on your home heating bill.

Nova Scotia NDP Leader Gary Burrill says the Conservative government must act and increase the heating assistance reimbursement program.

“Right now, based on the government’s home heating oil assistance program total, a person cannot receive more than $600,” Burrill said. “Well, what’s that, half a tank?”

He’s calling on the province to review the heating assistance reimbursement program, saying it’s fine for another time but needs to be updated.

With all the uncertainty in the oil market, its predicted prices will continue to rise in the near future, Muralidharan says.

“If this war continues, these high prices are here to stay.”

McTeague says the federal government could give energy rebates to Canadians.

“Ottawa can do something about it. It makes no sense for any government to be perceived as profiting from these extraordinary price increases, which set a precedent for how quickly they have increased.

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