Soaring gas prices on Prince Edward Island can be attributed to supply and demand, an official with the Island Regulatory and Appeals Commission said Tuesday.
Allison MacEwen, the commission's director of regulatory services, said economic activity was greatly reduced around the world during the COVID-19 pandemic, and so too was petroleum consumption due to a decrease in air and ground traffic.
"It resulted in the build up on inventories," explained MacEwen.
And just before the pandemic in early 2020, Russia and countries like Saudi Arabia were in the midst of a price war and were flooding the market.
"That contributed to some global surplus inventories … to set the stage, if you will, for the reduction in demand that occurred as a result of COVID-19," said MacEwen.
"The combination of both essentially flooded the market with product and as a result, we saw pricing drop."
Now that global economies have started to recover from the pandemic, demand is increasing, and therefore gas prices have also increased.
Gas prices higher during summer
But MacEwen also noted that prices are typically highest during the summer, when there is more travel.
"You get some escalated pricing around those times just because of demand," MacEwen said.
The price of gas on the Island on Tuesday was about $1.35 per litre.
"Our total demand is relatively small in the overall scheme of things," said MacEwen. "It's more what happens off-Island that influences the price of crude, and therefore the price of refined product at the pump."
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