Gasoline prices in Eastern Canada have jumped by as much as 12 cents a litre in recent weeks as competition, the fortunes of the U.S. dollar and crude oil costs all create volatility at the pump.
Wild swings in the price of gas are a sign of "guerrilla warfare" pricing tactics among gasoline dealers, an industry analyst said Friday.
"The volatility at the pump price is one of the strongest indicators that I know of very, very strong competition," said consultant Michael Ervin of M.J. Ervin and Associates.
"It's guerrilla warfare," Mr. Ervin said from Calgary.
Prices in Toronto hit about $1.15 a litre on Friday. Price monitoring website Gasbuddy.com said a litre in Stephenville, Nfld., ran up to $1.17 and gas was just over $1.12 in Halifax. In Montreal, gasoline prices have swung up and down and were also just shy of $1.15 a litre.
One frustrated Montreal driver said prices have been going up 12 cents and then down 10 cents about every week to 10 days for "no apparent reason."
"It has become this cat-and-mouse game of trying to fill up when it's low," he said. "It's like a yo-yo."
Liberal MP Dan McTeague, who closely follows gasoline prices, said he doesn't believe the situation will get better for drivers.
"The moving up and down, the swings - that's a sign that there's a lot of tumult and turbulence at the retail level - which could lead to fewer retailers staying in business."
Mr. McTeague said he believes Canada should have a weekly report on petroleum, keeping track of supply and demand. He noted the U.S. Department of Energy issues such a report.
"That would allow people to know whether we have a shortage or whether or not demand is up and prices should be up," McTeague said.
He also said the recent closing of a Shell refinery in Montreal is contributing to a tighter supply of gasoline.
Carol Montreuil of the Canadian Petroleum Products Institute said gasoline prices have increased along with a recent runup in crude oil, which closed above $88 (U.S.) a barrel on Friday.
"At the end of the day, the market rules what prices at the pump are going to be," said Mr. Montreuil, the institute's vice-president.
"The price is never set by the small player, it's set by the market maker and the market maker in our case is the U.S."
He said the closing of the Shell refinery wouldn't have an effect on prices since they aren't set locally.
Higher prices are generally felt in Eastern Canada, especially in Montreal, because of higher provincial and local taxes on gasoline, Mr. Montreuil added.
The average gasoline price in Canada Friday was $1.07 for regular gas, compared with a buck a litre a year ago.
Mr. Ervin said price increases and wild swings aren't characteristic of all markets in Eastern Canada, but are a local phenomenon.
"Strategically, tactically, dealers move their prices down for a period of time, then back up again and try to do it quickly - so quickly as to get in and get out and grab volume before the big oil companies basically take notice and change their prices," he said.
"You can't predict when they start. You can't predict how they go or how long they will last. It's localized."
Petroleum analyst Roger McKnight said gasoline prices aren't following the laws of supply and demand, noting there's a "huge" supply and "anemic" demand.
The U.S. dollar and the price of crude oil are driving the situation, said Mr. McKnight, of En-Pro International based in Oshawa, Ont.
"If the U.S. dollar goes up, crude goes down and then [pump]prices go down," he said.