Island drivers praying to see gas fall below 2.00 cents per litre might get their wish in the next few weeks, but it won't last long. (Alex Rawnsley/NanaimoNewsNOW)

By Jordan Davidson

pump pain

Slightly reduced gas prices across Nanaimo not expected to last

Jul 13, 2022 | 4:32 PM

NANAIMO — While the prices at the pumps have slowly dropped since the Canada Day long weekend, don’t expect it to last.

Prices jumped to around 226.9 cents per litre back in May, with global demand, conflict in Europe, long-standing supply issues, and COVID-19 being factors.

Gas price analyst Dan McTeague said prices in Nanaimo may drop a bit more from their current average of around 205 cents per litre.

“We’ll see prices go a little lower, then stabilize before they go back up at the end of the month. That’s because the markets are really panicking right now. Fears of recession, lockdowns in China…take it this way, these might be the best prices we’re going to get for a while.”

He said the threat of recession gives the impression of a “global demand destruction”, with people expecting to be out of work and thinking the situation will only get worse, which impacts demand.

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McTeague added the focus over the past few weeks has been more on the demand side rather than looking at supply issues.

“The production of oil, diesel, and gasoline are just atrocious. The demand picture is really masking what’s happening on the supply side and there’s an inadequacy of supply.”

Some analysts believe a small drop in price might lure people into a false sense of security and in turn increase the fuel demand, making supply issues worse.

“It’s pretty clear that as you lower the price for fuel, fewer people want to respond and produce. Demand will continue to rise, and that’s the irony in all of this. Lower prices potentially mean higher prices.”

It’s also been an unusually quiet year on the extreme weather front, as big storms in the southern U.S. around the Gulf of Mexico often contribute to high gas prices, as it can threaten production lines.

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jordan@nanaimonewsnow.com

On Twitter: @JordanDHeyNow