He is not travelling this weekend, but Brett Klesko and many others filling up at St. Albert gas pumps on Friday morning were surprised that prices were down. Usually they go up before the long weekend, he said.
On Friday morning, the price for a litre of regular at St. Albert gas stations was around 97.4 cents. The average price in Edmonton was about 94.4 cents per litre. Last week, the price per litre in the city was 100.6 cents, whereas a year ago it was 114.8 cents.
Most people at the pumps like Klesko or Sylva Galea do not pay too much attention to what is causing gas prices to go up and down. But recently the changes have been noticeable and frequent, they said. Galea said it’s a pain, though she likes the days where gas is cheap. Asked if she knew what makes the prices change, she said “it’s China.”
Dan McTeague, senior petroleum analyst with GasBuddy.com, agreed that concerns over weaknesses in the Asian economy have caused crude oil prices to drop significantly in the past weeks.
Earlier this year, the Organization of Petroleum Exporting Countries (OPEC) sent oil prices up after demand in Asia was expected to grow. But in July, crashes in the Shanghai market fuelled angst amongst investors and prices dropped. This week, the Chinese stock exchange was closed and prices remained relatively unchanged, said McTeague. That may change again next week, when the market reopens, he said.
But there is more to gas prices than the Asian economy. Three refineries in Edmonton had problems in August, causing some Shell stations to close down and putting pressure on gas prices. The trading price in the United States for wholesale gas is also affecting the cost at the pump, he said.
“And another factor that no one is talking about is we are now one step further to Iran introducing oil to the market,” he said.
Due to sanctions, Iran was previously not allowed to bring its oil to the international market. But a new agreement between the United States and Iran over its nuclear program will likely change that. If Iran sells oil, prices will drop down again, likely by mid-September or early October, said McTeague.
“And Iran is only too willing to get its product out there because it will improve its economic situation dramatically,” he said.
But for this weekend, McTeague expects prices will remain low. “If anything, I believe that by Sunday you will see prices drop a bit more,” he said.
