A motorist is shown filling up their car at a gas station. (THE CANADIAN PRESS)

By Nick Nielsen

hurricane causes uncertainty on future prices

Fuel prices drop around Saskatchewan

Sep 9, 2024 | 4:24 PM

You may have noticed around Saskatchewan that the price of gas has started to substantially drop. In the last week alone, the average price of gas in Prince Albert went from $1.65 per litre down to an average price around town of $1.51 per litre as of this writing, and there’s other spots in Saskatchewan that have dropped down as far as $1.38 in Rosthern all according to GasBuddy.com

There’s a good chance the price of gas continues to fall over the next few weeks according to petroleum analyst with GasBuddy Patrick De Haan. There’s a number of reasons gas prices are dropping around the province and around the country for that matter, and all of them seem to be compounding at the same time.

“Oil prices have dropped to their lowest level since 2021. That’s certainly a big part of this, but as we get out of the summer driving season, demand for gasoline declines across much of North America. Temperatures are cooling off, Canadians and Americans alike are simply not driving as much. That decrease in demand also puts downward pressure on gas prices, and we’re now just a week away from switching back to cheaper winter gasoline, which should also provide some price relief.”

Another factor that may not be coming into play just yet but could also lead into some price fluctuations in the near future is Tropical Storm Francine. The storm is roughly less than 24 hours away from being upgraded to hurricane status and looks like it could hit Texas and Louisiana. With those areas targeted, it could have an effect on the refineries in those states, De Haan said.

“This storm is projected to make hurricane status here by roughly 7 p.m. tomorrow, and so with the hurricane basically off the coast of Texas, you may start to see some refineries limiting production as a safety precaution because if there is power disruptions, refineries will want to make sure that they’re able to safely shut down operations instead of a more drastic unplanned shutdown, which is very chaotic and quite dangerous in some instances. So you may see some of the refineries in South Texas and in Louisiana start to throttle back,” he said.

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De Haan said that if the refineries do get shut down due to Tropical Storm Francine, the price at the pumps will see that effect quickly. Because these refineries all run 24/7, any stop in production means less product to sell, and therefore a higher demand.

“Any reduction in gasoline production would very quickly start to impact the supply chain. So depending on the degree of how big the storm gets, I don’t expect right now gas prices to be significantly impacted. They could be impacted in low level, but if this storm grows more significant, if it turns into say, a major hurricane which is a category three or stronger or if it also starts moving a little bit closer to Texas, then there are going to be more refineries that are likely to at least partially slow down operations to make sure that if there is disruption that they are in a better position.”

While Tropical Storm Francine may influence the gas prices in the near future, the impending switch from summer to winter fuel is already showing an effect on the pumps now. While you won’t be getting winter fuel pumped into your vehicle now, gas stations will be doing their best to get rid of their summer reserves in the next few weeks.

“You’ll probably see summer gasoline flowing for another week and a half or two weeks, but pretty quickly a refinery’s job is to basically make sure that they don’t have a whole lot of summer gasoline left because it’s more expensive to produce and they want to recover some of that. Once you get to the cooler months when you don’t need to produce that summer gasoline, it certainly takes a bite out of their revenue.”

By law, gas stations in Canada cannot switch over to winter gasoline until Sept. 16 at the earliest, but De Haan says it’s common for gas stations to mix in what’s left of their summer fuel into their winter reserves when they arrive in early August.

With some gas stations in Saskatchewan already down to $1.38 per litre, there is the potential to see these prices fall even further. While that is good news for the average commuter in Saskatchewan, the oil and gas business may be in for a rough winter.

“I think it certainly depends on the overall status of the economy and the price of oil. OPEC has been cutting production now for over a year, cuts that they had extended now. So that is a wild card, but traditionally it wouldn’t be a surprise if we saw prices in Saskatchewan and much of Canada potentially fall another $0.10 to $0.20 a liter here by the time we get closer to the end of the year.”

According to GasBuddy.com at the time of this writing, the cheapest gas in Saskatchewan is at the Discount Regina station in Regina at $1.34 per litre, while the most expensive is at the Co-op in Davidson at $1.68. The average price around the province is sitting at $1.49.