An energy expert warns Toronto drivers to brace for significantly higher gas prices, with a new record expected by late May or early June.
Record-Breaking Prices Ahead
Dan McTeague, a gas industry analyst and manager of affordableenergy.ca, said he anticipates gas prices will surpass the previous record of $2.159 per litre set in Toronto on June 11, 2022. That record followed sanctions on Russia after its invasion of Ukraine.
“The difference between now and then, it’s simple math, but that knocked off about 3% of the world’s potential oil supply,” McTeague explained. “This particular issue in the Persian Gulf is about 20% of the world supply.”
He noted that as summer demand increases, especially after the May 2-4 weekend, prices could rise by another 20 to 25 cents per litre by the end of June. “$2.20 a litre is definitely in the foreseeable future. That would be an all-time high and it would stay high. That’s not just a one-day event; it stays at that high for quite some time.”
Supply Disruptions from U.S. Strikes
McTeague attributed the price surge to U.S. strikes on Iran, which have severely limited oil shipping. Even if the Strait of Hormuz reopens, a significant lag will persist until supply catches up with demand.
“The longer the extent of the war, the damage done as a result of it, and the lag time to get back up on our feet means there’s a huge disconnect between supply and demand,” he said. “The supply is extraordinarily short. We’re at about 1.5 billion barrels less than what the world uses, and that’s going to leave a much longer impact even if there was some kind of resolution, which there doesn’t appear to be.”
Breaking Point for Drivers
McTeague acknowledged that there will be a breaking point for consumers, but he could not predict the exact price. “There has to be a price signal that destroys demand. That’s economics fundamentals 101. You have to have prices in order to curb demand so supply can catch up. But supply being offline for such a long period means we haven’t hit that point yet.” He added, “No one wants high prices, nor should we in a country like Canada have that.”
