As Canada anticipates the arrival of the new year, there are expectations of a slight increase in gasoline prices.
Expert Analysis on Gasoline Costs
However, Michael Mangouris, Chair of Global Management Studies at the University of Toronto, offers insights into the trajectory of these costs, foreseeing a return to normalcy and overall price stability.
Impact of the Carbon Tax Increase
Mangouris suggests that an increase in the carbon tax could result in a 2.5 to 2.6 percent rise per liter in gasoline costs until 2024. Despite this potential hike, he highlights a balancing factor: the anticipated decline in crude oil prices. The current high inventories in the United States, coupled with expected low demand from China, contribute to the projection of generally stable gasoline prices throughout 2024.
Geopolitical Factors and Historical Context
Reflecting on 2022, Mangouris notes that gasoline prices experienced an upward surge due to various geopolitical factors, reaching a record high of 214.9 cents per liter in the Greater Toronto Area. However, since then, prices have reverted to a more normal range, albeit remaining higher than pre-2022 levels. The recent dip to 139.9 cents per liter in Greater Toronto indicates a multi-month low, and Mangouris foresees a continuation of this trend into 2024.
Stability and the US Presidential Election
Mangouris identifies the upcoming US presidential election as a significant factor contributing to stability. Historically, election years in the United States have impacted gasoline prices due to their status as a key election issue. The increase in US crude oil inventory is seen as a strategy to manage gasoline prices, thus influencing market stability.
Comparative Analysis between Canada and the US
While the US experiences fluctuations in gasoline prices during election years, Mangouris emphasizes the role of taxation as a distinguishing factor between Canadian and US rates. In Ontario, the sales tax is 13 percent, with a fuel tax of nine cents per liter after the Ford government’s extension of the temporary reduction until June 30, 2024. Importantly, Mangouris notes that Ontario is not witnessing a significant increase in gasoline demand, a factor expected to keep potential price increases in check.
As 2024 unfolds, these analyses offer a comprehensive perspective on the factors influencing gasoline prices in Canada, projecting a path of relative stability despite potential challenges.
Source: eng.akhbrna