It’s a good summer to be selling gasoline, not a great one to be buying it
In mid-February, the price of oil hovered around $50 US a barrel, and a litre of gasoline cost, on average, $1.01 Cdn.
This week, the price of oil is hovering around $50 a barrel and the average price of a litre of gasoline is $1.22. A few small things have changed over that five-month period: the Canadian dollar is lower by about three cents; Alberta has added a four cent tax to gasoline bought in that province.
But the big difference is that refineries are making a killing this summer.
Refining margins are the difference between the cost of crude oil and the cost of wholesale gasoline.
‘We’re at that part of the summer where demand for gasoline is never going to be stronger.’ – Stephen Schork, Schork Report
Both Canadian and U.S. refining margins are running at seven- and eight -year highs. In Canada last month, the refining margin was 27.7 cents per litre according to data compiled by Michael Ervin of the Kent Group.
“We’re at that part of the summer where demand for gasoline is never going to be stronger,” said Stephen Schork, editor of the Schork Report, which is focused on commodities.
“We’re at the height of the northern-hemisphere peak-demand season.”
Demand for gasoline is high
Demand for gasoline is indeed very high this summer. According to the U.S. Energy Information Administration, gasoline demand is nearly seven per cent higher than it was a year ago. That’s a significant increase.
Refiners are going full steam right now, at over 90 per cent capacity, in order to keep up with demand.
