With oil prices rising above $109 US a barrel Friday, Canadians are feeling pain at the pump.
The average gas price across Canada was $1.36 a litre, the highest level since last September, and it could be heading higher.
Prices ranged from $1.12 in Edmonton to $1.49 in Montreal according to tomorrowsgaspricetoday.com.
The summer driving season often brings higher gas prices, as consumers need more gas for weekend trips and vacations.
The downside for the economy is that rising prices at the pump can leave less money in our pockets for other spending.
The cost of gasoline was a significant contributor to the rise in the cost of living in June, according to figures released today in Ottawa. Gas prices went up 4.6 per cent from May to June.
And that was before the recent runup in the price of oil.
August crude passed $109.04 US a barrel on Friday, the highest level since March 2012, as U.S. oil supplies continued their decline. By the afternoon, it was trading at $108.59 a barrel. As recently as July 1, crude was trading at $96 US.
At the same time, the difference in price between West Texas Intermediate crude, which has been as much as $20 cheaper, and Brent crude, has shrunk to 67 cents.
U.S. crude inventories have been dropping for weeks, a sign that Americans are driving more and business demand for gasoline is on the rise.
The political uncertainty in Egypt may also be pushing crude prices higher. Although Egypt is not an oil producer, it controls the Suez Canal, an important shipping channel.
For Canadians, the falling dollar means gas prices are headed higher, according to consumer advocate Dan McTeague.
"It doesn't help that the Canadian dollar has dropped five per cent in value because all of our commodities are expressed in U.S. terms, so that's been a bit of a hit, an unexpected hit for many," he told CBC News.
"Combine that with hedgers, speculators, investors, fleeing commodiaties like gold in favour of black gold — oil — and you see why prices are where they are today."
A recent Bank of Canada study says rising world oil prices can boost the Canadian economy by making unconventional crude oil production, including fuel from oil sands and oil shale, more commercially viable. It can also make alternates such as solar and wind energy, more commercially attractive, especially in markets where access to oil is difficult.
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