The Canadian Press

High fuel prices softening demand for gasoline in North America

Fri Jul 18, 7:20 PM

By Lauren Krugel, The Canadian Press

CALGARY - It is hard to pin down exactly how big of a bite high prices are taking out of Canadian gasoline demand this summer, but it appears consumers are changing their habits as they try to cope with gasoline prices of $1.40 and higher.

There's no doubt Canadians are using less fuel, said energy industry consultant Michael Ervin.

"It's pretty clear that we're seeing demand for gasoline soften in North America in general," he said.

A report by the American Petroleum Institute on Friday said demand for all oil products was down three per cent during the first six months of 2008, the lowest in five years.

Gasoline deliveries, in particular, were down 1.7 per cent.

"The decline in gasoline demand was the first significant one recorded in 17 years. Higher pump prices and a slowing economy were undoubtedly factors," said API statistics manager Ron Planting.

The latest figures from Statistics Canada seem to suggest a similar trend here.

A report earlier this month said gasoline sales nationwide were down more than three per cent between May of this year and last.

Scott Wilson of the Alberta Motor Association said people have been making a few changes to their driving habits, but there are still plenty of vehicles on the highway.

"They might be driving a little less. Their vacation homes might be a little closer to home rather than farther afield," he said.

"I think there's some minor adjustments being made and that will certainly have an impact on the amount of travel that's probably done over the summer periods."

Surveys by the AMA suggest that gas prices would have to be $1.45 or higher in Alberta - where gasoline is more than 10 cents lower - before making any more significant changes.

"People might just decide to grin and bear it during this summer high demand season and be quite accepting when the price does drop a little bit," he said. Pump prices did appear to be receding in many parts of Canada Friday.

Wilson said there seems to be much more "hysteria" over gas prices in the United States than in Canada.

Americans seem to be ditching their gas-guzzlers in droves, but in Canada auto sales figures all around remain quite robust.

"Canadians already tend to buy more fuel efficient vehicles than the Americans," Wilson said.

Gasoline prices are driven in large part by how much demand there is for it, Wilson said. So if North Americans continue to decrease their thirst for fuel, prices may follow suit.

"Maybe this is a good thing in disguise," he said.

In a report last month, CIBC World Markets suggested there could be 10 million fewer cars on U.S. roads by 2012 at the rate gas prices are going. In Canada, that figure would be 700,000 fewer cars.

The average price of gasoline in Canada Friday was close to C$1.38 per litre, about a cent and a half lower than a week ago, but close to 27 cents higher than a year ago, according to the price-tracking website GasBuddy.com.

Part of the decrease in pump prices could be a response from retailers to a nearly US$16 drop this week in the price of crude oil, the raw product from which gasoline is made.

But analysts say it could be a few more days before the full impact of the crude drop registers at the pumps.

The effect was more pronounced in some areas of Canada than in others.

In Toronto the average price was $1.26 a litre, down nearly nine cents from a week ago. In Edmonton pump prices were down more than two cents to $1.31.

But there was no respite in Newfoundland and Labrador, where pump prices were above $1.50, two cents higher than a week ago.

LIKE IT?  LET OTHERS KNOW

Be the first to recommend - Sign in now


See what other people are recommending - Popular Stories