The Bank of Canada (BoC) had some rather bad news for Canadian motorists today after they revealed that gas prices will likely remain high for a few more years.
In its Monetary Policy Review, the federal organization explained why Canadians pay more for their gas than Americans do.
The price at the pump generally includes taxes, the profit margin tagged on by refiners and retailers, and the cost of crude oil itself – and it's this last cost that's the point of contention here.
West Texas Intermediate (WTI), the oil used as a pricing benchmark in the United States, accounts for only 50% of Canadian demand. Brent crude from the North Sea accounts for the other 50% and is responsible for the exasperation of Canadian drivers.
Since the beginning of the year, the price of WTI has dropped to $87 USD per barrel, while the price of Brent has crept up to $109 USD. The situation is unusual, as both types of oil generally mirror each other on the stock markets.
BoC predicts the gap will remain for a few years yet. Consequently, Canadians shouldn't expect a dramatic drop in prices at the pump any time soon.
The Bank of Canada added, however, that this informatoin doesn’t necessarily mean Canadians are being ripped off every time they fill up the tank, either.
Source: La Presse Affaires
In its Monetary Policy Review, the federal organization explained why Canadians pay more for their gas than Americans do.
The price at the pump generally includes taxes, the profit margin tagged on by refiners and retailers, and the cost of crude oil itself – and it's this last cost that's the point of contention here.
West Texas Intermediate (WTI), the oil used as a pricing benchmark in the United States, accounts for only 50% of Canadian demand. Brent crude from the North Sea accounts for the other 50% and is responsible for the exasperation of Canadian drivers.
Since the beginning of the year, the price of WTI has dropped to $87 USD per barrel, while the price of Brent has crept up to $109 USD. The situation is unusual, as both types of oil generally mirror each other on the stock markets.
BoC predicts the gap will remain for a few years yet. Consequently, Canadians shouldn't expect a dramatic drop in prices at the pump any time soon.
The Bank of Canada added, however, that this informatoin doesn’t necessarily mean Canadians are being ripped off every time they fill up the tank, either.
Source: La Presse Affaires