$1.60 Gas Canada

April 7, 2012 by staff 

$1.60 Gas Canada, Canadians already hit with gas price shock could soon be paying even more at the pumps due to supply problems and the possibility of conflict in the Middle East, the Bank of Montreal says.

Gas prices across Canada jumped from an average of $1.20 in January to around $1.40 this week. That was the average pump price in Toronto this week, and in Montreal prices are hovering around $1.47. They are now 8 per cent higher than they were at this time last year, even though oil prices are slightly lower than they were in April of 2011.

The risk of gas prices hitting $1.60 per litre are “not insignificant,” BMO Capital Markets senior economist Sal Gualtieri wrote in a note Thursday.

“Although crude oil prices are expected to hover near $100 a barrel in the year ahead, the risk of a near-term spike is elevated due to potential supply disruptions,” he wrote.

At the same time, oil speculators — investors who buy oil in order to sell it at a higher price later — are driving up oil prices beyond what the market would normally sustain.

Oil tradinganlyst Jim Ritterbusch told the Globe and Mail there is a near-record number of speculative contracts on the oil market right now, who are trying to cash in on supply problems caused by struggling U.S. refineries.

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