Summer gas prices forecast to remain stable

From gasshortages in Western Canada to adramatic spike incosts of gasolineinNewfoundland and Labrador,Canadian motorists may be concerned that these are signs thatprice increaseswill surely hitthe pumps this summer.

But some industry analysts are forecasting no major spikes for the balance of the summer driving season.

• Petro-Canada gas stations in B.C. and Alberta running out of gas
• Fort McMurray wildfire cuts production by a million barrels a day and oil prices drop?

"Myprognosisis we've probably seen as much of a price increase at this point that we will see in the summer," said industry analyst Michael J.ErvinofKent Group Ltd.

"There's always thoseoutlierthings. If there was a substantial increase in crude prices, that could have an impact but we don't think that we're goingto see any upward volatilityof crude prices in the near future."

RogerMcKnight, a chief petroleum analyst with En-Pro International Inc., saidthat in12 of the last 13 years, gas prices hit their peak around mid-April.

In the run-up to the summer drivingseason, which startswith the MemorialDay weekend in the U.S.,prices generally start to fall back because refineries are geared up and ready for the summer driving season.

And that pattern seems to be repeating itself this year as well, he said.

"Enjoy it while youcan," saidMcKnight. "The prices will remainstable if not fall noticeablybetween now and Labour Day.

"The U.S iskeeping pace with demand very well indeed," he said. "The only thing that could upset the apple cart is refinery outage or a pipeline outage,which is very hard to predict."

Volatility in the system

That's not to say that there isn't volatility in the system, saysDanMcTeague, senior petroleum analyst for gasbuddy.com.

In the U.S. Midwest, two major refineries, one in Ohio, the other in Michigan,are short ofsupply, which could affect Ontario,he said

Meanwhile, in Western Canada,the Fort McMurraywildfiresresultedin thecut ofoilproduction bya million barrels a day at one point. Anda unitoutage atSuncor'sEdmontonrefinery has led to a number of gas stations going empty in Alberta, Saskatchewan, Manitoba and the northern Interior of B.C.

That means with high U.S.demand and ongoing troubles in Western Canada in terms of gettingcrudeto market, to refineries and intothe West Coast, "we're in for some turbulent weeks ahead," McTeaguesaid.

"The market is drum-tight right now. There isn't anybody else out therein the U.S. or Canada ... to sell spare barrels toSuncor," saidMcTeague. "Suncorright now is sayingthey'reputting all their stationson what's called allocation [because they] don't haveenoughgasto get around."

The expectation is that asthings get back to normal in FortMcMurray, so, too, will production rates, saidMcTeague.

"But there'sstillthatperiod of uncertainty that we're going through and it's going to take some time to work its way through."

In the meantime,he said, there will beupwardpressure on gas prices pretty much everywhere in Western Canada.

Yet so far, saidErvin, that pressure hasn't materialized into higher gas prices for the region. According to his company's survey this week, andfactoring outthe tax differences, pump prices in markets like Edmonton and Calgary were a cent or two less than the Canadian average.

Wildfires didn't cause price increases

"It really shows that the wildfires, although devastating for the FortMcMurrayarea, haven't led to any sort of price increases."

As for the sudden 18.5 cent gas hike in Newfoundland and Labrador, that has nothing to do with the industry, but is the result of ataxincrease implemented by the provincial government to make up for lost revenues and a ballooning deficit.

With record levels of oil inventory and the price now hovering around $50 a barrel, McTeague said he didn't expect crudeto haveany effect on the price of gasoline.

"Refinerysupply and demand hasmore to do wth gas prices than price of oil," he said.