Average Gasoline Prices Up 3.8 Per Cent in Canada Over Week Before To

By ALLAN SWIFT

MONTREAL (CP) – Canadians beware: the $50 fillup that had you complaining last week will cost about $52 this week, and experts predict gas prices will continue to soar as summer vacation season approaches.

The average retail price of regular gasoline in Canada jumped by 3.8 per cent since last week to $1.079 a litre.

The rising prices have brought calls for cuts to gas taxes and pleas for Canadians to become more fuel-conscious when purchasing vehicles.

John Williamson, director of the Canadian Taxpayers Federation, says Prime Minister Stephen Harper needs to make cuts to gas taxes a “top priority” in the upcoming federal budget. While in opposition, Harper proposed capping the GST charged on gasoline priced above 85 cents per litre.

Governments should also offer relief by reducing some gasoline taxes, said Mel Fruitman, vice-president at the Canadian Consumer’s Association. But he had an important caveat: Canadians need to find ways to reduce consumption.

“Unfortunately we have to face the fact that gasoline prices are on the rise and are going to continue to do so,” said Fruitman. “I’m afraid I don’t have much sympathy for someone who pulls up in a Lincoln Navigator or a Hummer and spends a hundred bucks to fill up the tank.”

Automotive consultant Dennis DesRosiers said many Canadians are putting off buying new vehicles as they wait for prices to stabilize.

Those who do buy are abandoning mid-size vehicles.

“About two-thirds of Canadians are moving downmarket to entry-level products and about one-third are moving up to sport utilities and luxury vehicles,” DesRosiers said.

“One of the very best things a consumer can do in the face of high gas prices is to buy a new vehicle,” he added.

“Vehicles today are from one-quarter to 50-per-cent more energy efficient than vehicles even a decade ago.”

Ervin & Associates Inc. of Calgary reported Tuesday in its weekly pump prices survey that regular gas prices Tuesday ranged from $1.244 in Labrador City, N.L. – an increase of 5.2 per cent over the previous week – to a low of 93.4 cents in Lethbridge in southern Alberta, representing a drop of 0.4 per cent.

The Canada average price is based on pump prices in 10 cities. For example, Vancouverites were paying $1.115, Calgarians $1.01, Torontonians $1.049, Montrealers $1.14 and Haligonians $1.125.

Gasoline is just one commodity whose price is driven up by the cost of crude oil, which closed on markets Tuesday at a new high above $71 US amid international tension over Iran’s nuclear program and worries about supply disruptions in Nigeria.

“We’ve seen prices pushing higher since about the middle of February,” said MJ Ervin analyst Cathy Hay, noting that gas is about 15 cents higher per litre than a year ago.

“I would expect we’ll see it push higher this week,” she said, reflecting crude oil prices as well as factors like new gas content regulations in the United States.

But Hay does not believe gas will go up to the peak of $1.26 a litre it reached back in September after hurricane Katrina hit.

“We’re entering the (peak) driving season with prices that are significantly higher than they were last year and there’s no reason to believe that they will change significantly.”

Hay said gasoline sales go up by about 20 per cent between the Victoria Day long weekend to Labour Day weekend in September as Canadians take to the roads for vacations, and prices tend to go up anyway due to supply strain.

Dane Baily, spokesman for the Canadian Petroleum Products Institute, which represents Canada’s largest refiners including Imperial Oil (TSX:IMO), Shell Canada (TSX:SHC), Husky Energy (TSX:HSE), Petro-Canada (TSX:PCA) and Suncor Energy (TSX:SU), said that in addition to record crude oil prices, there is a decline in gasoline inventories in the United States due to a shortfall in refining capacity.

Baily said refineries have shut down for routine maintenance that they normally do in the fall but delayed last year when hurricanes Katrina and Rita knocked out some refining capacity in the U.S. Gulf Coast.