Falling oil prices could affect prices at Metro Vancouver pumps

VANCOUVER (NEWS 1130) – It’s difficult to know how plunging oil prices will affect gas prices at local pumps, but its possible the latter could dip, according to one analyst.

Michael Ervin, with Kent Group, said if crude prices stay down for a while, gas prices will drop across the country.

But, he adds, it’s misleading to think a decline in gas prices will happen right away.

“The price of crude is just one aspect of what goes into the price at the pump,” Ervin said. “The other component has to do with the refiner market.”

Ervin said Vancouver’s market is different compared to the rest of Canada, and the quoted price related to a product doesn’t even get used in Canada by refiners.

“And, of course, it’s quoted at a U.S. price.”

He said it’s important to recognize the quoted price of oil today is what the futures price is, which is what a refiner pays if it decided to lock now for April delivery.

It’s a bit misleading to think a drop in crude prices translates into a dip in the price at the pumps the next day, he added.

This is also time of year when markups increase, Ervin said.

World oil prices are in free fall after Saudi Arabia slashed its crude sale price Sunday, signalling the start of a price war after OPEC talks with Russia broke down without an agreement on production cuts. The threat of increased crude supply, on top of prices already weakened over fears the global outbreak of a novel coronavirus would lead to lower fuel consumption, triggered the crash.

The turmoil is already affecting Canadian companies and consumers.

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