Summer driving season beckons, just as prices at the pump have shot to a record in Central Canada and are elevated in other parts of Canada.
But relief could be on the way in the coming months, according to CIBC World Markets. The report came as gasoline futures tumbled almost 8 per cent Wednesday after a U.S. government report suggested Americans are driving less because of higher pump prices.
Canadian gasoline prices should subside, the bank said. "If history is any guide, a drop in the global price of crude oil, if sustained and persistent, will eventually filter into weaker gasoline prices at the pump for Canadians," said economist Emanuella Enenajor in a note published Wednesday.
That hasn't happened so far. Only a "fraction" of last week's 15-per-cent drop in crude oil prices translated into a lower bill at the pump, "likely reflecting retailers' expectations that global petroleum costs could inch up again," she said.
Indeed, crude oil prices ticked higher this week.
The bank's prediction comes amid large regional disparities in gas prices - as much as 30 cents a litre. In Toronto, pump prices hit a record Tuesday after an overnight jump of about 6 cents overnight to nearly $1.40 a litre.
Gasoline prices rose by another 2.5 cents a litre Wednesday morning in many parts of Canada, according to tomorrowsgaspricestoday.com. The increase took effect across southern and eastern Ontario along with Montreal and Vancouver, the website said.
Gasoline pump prices don't typically match fluctuations in petroleum costs. But a sustained drop in crude should give drivers some relief if prior years are any indication.
"In the summer of 2008, the world price of petroleum was moving lower, but the declines were not immediately reflected in the retail price of gasoline," Ms. Enenajor said. "We only began to see clear declines in pump prices once the crude oil price was more than 20 per cent below its peak, and declining for about two months."
CIBC see crude oil prices softening in the coming months as rate hikes and tighter monetary policy dampen demand for commodities.
Meantime, in the U.S. gasoline demand dropped 2.4 per cent last week, the largest drop in seven consecutive weeks of demand declines, according to the Energy Information Administration. Analysts said motorists have been forced to conserve gasoline with pump prices close to a national average of $4 (U.S.) a gallon.
"That $4 number is not just having a psychological impact, but a direct impact on drivers," energy consultant Jim Ritterbusch told the Associated Press. "Normally, with the economy recovering, you'd expect gasoline demand to go up, but that's not happening."
With files from reporters Carrie Tait and Nathan VanderKlippe, the Canadian Press and the Associated Press.