More incentive to keep your new year’s resolutions

If taking public transit or biking to work was one of your New Year’s resolutions, you may want to grab your helmet or renew your bus pass. According to a report by CIBC World Markets released today, a growing gap between supply and demand will ‘drive gasoline prices in Canada to $1.50 a litre in the near future’… a price that will be considered the new normal.

Causes of this price increase are attributed to increasing demand in developing countries, depletion in existing oilfields and delays in putting new fields into production; all of which will constrain supply growth over the next five years.

CIBC notes that one reason for rising fuel costs is increasing demand from less developed countries, whose economies are undergoing exceptional growth. An example of this includes the growth of car ownership in countries like Russia and China, which is boosting fuel demand. An economist from CIBC world markets also notes that an even more important factor has been massive price subsidization in OPEC countries which has ‘spurred extraordinary near-double-digit growth in oil demand.’ Other reasons for rising fuel costs include accelerating depletion of existing petroleum sources, and delays and cost overruns associated with new energy projects slated to come on line, including those in the Canada. Many oil projects slated to begin production within the next five years are experiencing production timelines that are unrealistic. The report notes that almost all of the increase in global oil production has been because of unconventional supply, such as offshore oilfields and oilsands, which are sources that are prone to major delays.

Gasoline at $1.50 a litre would be quite a shock to Canadian drivers. The national pump price averaged about $1.07 as of Tuesday, according to the Calgary based consulting firm MJ Ervin & Associates. The record high for regular gas was an average of $1.26 a litre, set in September 2005 in the aftermath of Hurricane Katrina.

For more information on alternative transportation, see livinggreenvancouver.com’s post on Getting around: alternative transportation in Vancouver.