According to a report by industry experts with GasBuddy.com, average gas prices are set to hit a four year high in 2018.
The 2018 Canadian average price for gasoline is predicted at $1.19 a litre according to GasBuddy.com's Fuel Outlook, the highest average price since 2014.
Dan McTeague, Senior Petroleum Analyst with GasBuddy.com, says there's numerous reasons for the spike this year, including oil firming up to the $60 to $70 a barrel range.
He shares the weak Loonie is a big contributor to the increase, explaining the Canadian dollar is not keeping pace with higher oil values due to a lack of exports to the U.S.
"If we're discounting our oil now almost 26 dollars a barrel it means the Canadian dollar is suffering, and we know when the Canadian dollar loses ground to the U.S. gasoline prices go up because we price all of our fuel in U.S. terms," he explains. "We may be cheering a lower Canadian dollar as good for exports, but from a motorist's perspective not having enough pipelines and limiting our oil getting to world markets is going to have a negative impact not just in terms of the country's bottom line, but it's also going to lead to higher gas prices."
Along with a weak dollar comes surging fuel demand in the U.S., where demand for petroleum products rose at record-setting levels in 2017.
"We know that U.S. demand continues to exceed expectations and break records, and that of course puts greater pressure on prices here in Canada."
Another factor in the jump is the Organization of Petroleum Exporting Countries' (OPEC) announcement to extend its November 2016 decision to cut oil production into 2018.
"This is in light of the poor decision they made in 2014 to flood the market to try to drive down oil prices," he says. "That backfired and they're trying to close the proverbial Pandora's Box, and in the process we are seeing oil production output slow down while global demand for oil continues to rise."
While production cuts extend, world-wide demand is also set to hit 100 million barrels a day for the first time in history, driving up the price of oil.
McTeague adds the report does not consider geopolitical risks, including unrest in the Middle East and adverse weather.
"We see the five cents a litre average increase given the government's propensities to increase carbon taxes as being a very conservative figure, it could be much higher than that and we could exceed all those numbers."
The report also predicts September to be the most expensive month for fuel in Canada, McTeague figures prices could jump to between $1.21 and $1.27 throughout country-wide.
To read more on the 2018 Fuel Outlook click here.
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