Gas prices expected to be higher this winter than last year as economy improves

A man walks past gas pumps . THE CANADIAN PRESS/Jonathan Hayward

CALGARY - Pump prices normally fall when the cold weather starts to settle in, but drivers might have noticed them heading upward over the past month.

Gasoline averaged $1.02 per litre this past week, according to the latest pump price survey by Calgary consulting firm MJ Ervin & Associates released Tuesday.

At the beginning of October, the price was just shy of 95 cents per litre.

During the first week of November last year, the average pump price was just under 93 cents per litre.

"The winter season is generally low demand season for gasoline," said Jason Mills, an oil analyst with the National Energy Board.

Supplies of the fuel are "comfortable" going into the winter, he added, which should theoretically work to press prices down.

"But with crude prices expected to be higher than they were last winter, it's reasonable to expect that gasoline prices will also be higher."

The NEB's winter energy outlook released Tuesday calls for crude oil prices to average between US$75 and US$80 per barrel, as a sense of optimism begins to return to the recession-battered economy.

Benchmark crude for December delivery settled at US$79.60 on the New York Mercantile Exchange on Tuesday.

Since gasoline is made from crude, the price of oil plays a significant role in the final price at the pump. However, there are a number of other factors at play, like supply and demand dynamics in specific markets, for example.

A year ago at this time, crude was around US$70 per barrel. But it lost half its value by early 2009 before inching back up again.

Gasbuddy.com, which tallies gas prices reported by individual drivers in several cities, said the average Canadian price Tuesday was around C$1.03.

But Jason Toews, one of the website's founders, said he's actually been seeing the price inch down somewhat over the past day or two.

"I'm actually expecting gas prices to continue to go down. This looks like a little bit of a blip on the radar," he said, adding he expects prices to drop back to the 90-cent-per-litre range over the next few months.

Drivers in the United States have also been paying more to fill up their tanks in recent weeks. U.S. pump prices rose for more than two weeks straight before levelling off over the weekend.

The average price for a gallon of regular gasoline fell a half penny overnight to US$2.686, according to auto club AAA, Wright Express and Oil Price Information Service.

In Canadian dollars, that equals roughly 75 cents per litre. That's six cents more than a month ago and nearly eight cents more than gas cost at this time last year.