The main culprit is the falling Canadian dollar. With commodities like crude oil and wholesale gasoline priced in U.S. dollars, it takes more loonies to fill the tank.
Bank of Canada governor Stephen Poloz’s decision to cut the bank’s trendsetting interest rate by a quarter point to 0.5 per cent hasn’t helped. The Canadian dollar, which was trading around 82 cents U.S. in January, closed at 76.73 cents U.S. on Wednesday, its lowest level in more than a decade.
Industry watchers say refinery profits are also a big factor.
The price of wholesale gasoline is up 25.6 cents a litre since January, most of it the result of a 20.3 cent a litre increase in refinery margins or “crack spread,” the difference between the cost of crude and the price of wholesale gasoline.
“Right now, a refinery is a licence to print money,” said gasbuddy.com analyst Dan McTeague. “Refineries are making a lot of profit. It’s almost at record levels and everyone’s in for the ride — traders, speculators.”