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No summer sale at diesel pump

It’s been a strange summer for fuel prices.

Pump prices for gasoline in Canada and the United States typically rise in the summer, while diesel prices fall.

However, diesel prices have been flat in Western Canada this summer, and gasoline prices have fallen.

As a result, there was a strange sight in July for drivers pulling up to the pump on the Prairies: diesel prices were higher than gasoline in most cities.

“It’s very unusual,” said Jason Parent, vice-president of consulting with Kent Group, a data, analytics and consulting firm specializing in the downstream petroleum industry.

“We produced a chart a while back that looked at diesel versus gasoline prices on a seasonal basis. I don’t think there was a year in the last decade where we saw diesel prices well above gasoline prices (in the summer).”

Kent Group tracks and publishes on its website changes in diesel and gasoline prices for dozens of Canadian cities.

Its monthly data shows that retail gasoline prices dropped about 10 cents in Western Canada from April to July, while diesel prices sank a couple of cents per litre.

  • In Lethbridge, unleaded gas was selling for $1.063 cents per litre in April and 96.1 cents in July.
  • Diesel in Lethbridge averaged $1.043 cents per litre in April and $1.014 in July.
  • Gasoline was $1.023 cents per litre in April in Regina and 92.9 cents in July.
  • In Regina, diesel was 99.7 cents per litre in April and 94.6 cents in July.

Such a price decline in gasoline is unusual because Canadians are accustomed to gas prices jumping following the May long weekend, when summer unofficially begins.

“You normally see this rise in gasoline prices in the spring and summer months,” Parent said.

Gasoline prices also dropped in Ontario from April to July but not as much as Western Canada. As well, gasoline prices are higher than diesel in Ontario, which is the normal pattern for June, July and August.

One reason for the price decline may be gasoline supplies. The Kent Group said on its website that robust refinery production boosted gasoline inventories this spring in North America.

Like the unusual situation for gasoline, the diesel market is also odd.

Prices typically sink in June and July but that hasn’t been the case this year.

“Inventory levels, for diesel, the markets are a little tighter than they were last year at this time,” Parent said.

Spencer Knipping, a petroleum industry analyst with the Ontario energy ministry, said it’s difficult to know why diesel prices are relatively high this summer, but it may be connected to a March explosion at a Syncrude oilsands upgrader near Fort McMurray, Alta.

“Suncor, which now owns Syncrude, also brought forward its maintenance schedule (in the spring),” he said.

“So there was less oilsands production and less synthetic production out of Syncrude. I believe the synthetic crude … I believe you get a higher fraction of diesel production, so that may be one reason why diesel inventories were lower.”

Knipping said diesel demand is stronger in Western Canada be-cause of agriculture, mining and other industries. That demand may have kept diesel prices higher on the Prairies over the last few months.

Western Canada isn’t the only place where gasoline prices are down this summer. GasBuddy, which helps consumers find the best gas prices in the U.S. and Canada, published a unique chart on its website.

It showed that the average gas price in the U.S. was lower July 4 than Jan. 1 for the first time in 17 years of GasBuddy data.

Prices are normally significantly higher July 4. From 2014-16 they were 27 to 54 cents more per gallon July 4 than Jan. 1.

Strong demand for gasoline during the summer driving season may have finally pulled prices higher.

Kent Group data indicates that gasoline prices jumped about five cents in several Western Canadian cities in early August.

The increase may not last long because summer is winding down and gasoline prices typically decline in the fall.

That’s normally what happens, but it might not be the case this year.

“You may see gasoline prices remain relatively flat,” Parent said.

“Which is what I would expect, opposed to dropping in the fall and winter months.”

As for diesel, prices should climb slightly as the weather gets cooler, Parent said.

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