There is a 30-metre-high tower at a truck stop just west of Winnipeg where gasoline and diesel prices are posted.
It has been particularly hard to ignore the massive sign this winter because diesel prices have been 25 to 30 cents higher than gasoline for weeks.
As of Feb. 11, diesel prices in Winnipeg averaged $1.365 per litre, compared to $1.109 for gasoline, based on data from MJ Ervin and Associates, which surveys petroleum prices in 60 Canadian cities.
The discrepancy in Lethbridge was even more severe: $1.382 per litre for diesel and $1.077 for gasoline Feb. 11.
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Americans are also coping with higher diesel prices.
The U.S. Energy Information Administration reported that diesel was selling for an average of $3.977 per gallon Feb. 10, while regular gasoline was $3.309 per gallon.
Spencer Knipping, an Ontario energy ministry petroleum analyst, said diesel prices typically exceed gasoline in the winter because of heating oil demand in eastern North America.
He said abnormally cold temperatures in the U.S. and Eastern Canada have propelled diesel prices higher than usual.
Tom Kloza, founder of Oil Price Information Service, a petroleum pricing and news organization in Maryland, said U.S. electrical utilities have bought an extraordinary amount of diesel this winter.
Kloza said natural gas resources are ample in North America, but a limited amount is readily available on demand.
“There’s not a lot of downstream storage,” he said.
“When it gets brutally cold for a period of time, you have natural gas curtailments or cutoffs.”
Natural gas demand has been exceptionally high this winter, prompting suppliers to cut off gas several times in the United States. The curtailments forced utility companies to buy more diesel than usual as insurance.
“We saw probably unprecedented demand from utilities…. It was happening … everywhere east of the Rockies in the United States,” Kloza said.
“Utilities have to come in and buy diesel fuel to produce electricity … or to have it in case they lost gas…. That was what really prompted this huge spike in prices.”
The price gap could last until the end of March, but Kloza said the opportunity to make money should encourage refineries to bolster diesel stocks.
“This is something that may linger for the rest of the first quarter, but it’s not 2008 again where the price of diesel, the wholesale price, went upwards of $4.50 per gallon.”
He said refineries are making $30 to $50 per barrel on diesel, and companies want to take advantage of the pricing opportunity.
“Diesel is a product that every refiner wants to make… so they’ll catch up (with demand).”
