2018 may be the year of expensive fuel, analyst says
By Kate Ayers
Saskatchewan producers may face even tighter margins with the rise in fuel prices this year, according to a petroleum industry analyst.
The prices for regular gas and diesel are 10 cents higher than they were a year ago, Dan McTeague, a senior petroleum analyst with Gasbuddy.com, said in a paNow article on Friday.
The combination of bad weather, unsettled markets and the lack of pipeline infrastructure is driving up the price of fuel at the pumps, McTeague said in a 620 CKRM article last month.
“Because of pipeline restrictions and delays and opposition, we have less ability to bring our products to market – which explains why Canadian oil is being discounted by as much as $26 a barrel. You put that into perspective, that’s a real drag on the Canadian dollar.”
At the beginning of 2016, oil prices ranged from $47 to $52 per barrel. In 2017, prices rose to $62 to $70 per barrel. And McTeague has heard speculation that the price could rise to $75 by the end of this year, he said.
“So, any way you slice it, it’s going to be an expensive year,” he said in the PaNow article.
These increased fuel prices are putting pressure on Saskatchewan farmers.
“We are pretty efficient users of fuel but there’s really not much room for us to curb our use of fuel. So, at the end of the day, it’s just going to be an added cost to our bottom line. There’s really no way of getting around it,” Todd Lewis, president of Agricultural Producers Association of Saskatchewan (APAS), said to Farms.com today.
“Certainly, with our inputs, if fuel prices get too high … it really adds up. It’s a big hit for producers if fuel prices start to rise because at the end of the day, we are bound to pay the price that they ask,” Lewis said.
The Saskatchewan Association of Rural Municipalities ag committee is looking to revisit its resolution from last year asking the government to investigate fuel prices, Ray Orb, the president of the Saskatchewan Association of Rural Municipalities (SARM), said in the paNow article.
An oil company is building a new refinery in Alberta and Orb hopes this facility will help alleviate some of the high fuel costs longer term.
In the shorter term, however, prices are expected to remain firm throughout February. This situation sets up higher prices for the spring, when demand will continue to rise.
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