An acute energy crisis is making its presence felt in North America as consumers are finally starting to feel the pinch of much higher prices to fill up their cars and heat their homes.
The average retail price of gasoline in Canada hit $1.45 a litre on Wednesday, according to data compiled by retail analytics firm Kalibrate.
That’s a three-cent rise from Tuesday’s level and enough to beat the previous record of 143.6 cents, set this August. Prior to that, you had to go back several years to see higher gas prices.
The average pump price topped $1.40 a litre for the first time in 2008 and then $1.41 in 2014, research analyst Suzanne Gray told CBC News in an emailed statement.
While there are many factors that determine the price of retail gasoline, the price of oil is the biggest one, and crude prices around the world have roared back in recent months as supply and demand is proving to be more volatile than usual while the global economy is trying to emerge from the depths of the pandemic.
WATCH | Here’s why oil prices are spiking
Reduced supply driving increasing oil prices
19 hours ago
As demand exceeds supply after months of lockdown, gas prices are rising in Canada. Other countries are also seeing higher prices for fuel, but are more concerned about overall availability. 2:00
Like just about everything else, oil prices took a swan dive in the early days of the pandemic, as travel slowed to a crawl, factories closed up shop and the world economy effectively went into hibernation.
This slowdown went as far as causing the oil price to dip below zero for the first time on record in April of 2020. Oil traders literally couldn’t give away a barrel of oil for free and had to pay money to have people take it off their hands.
Oil rigs went into survival mode to make it through the pandemic. But as demand started to creep back, so, too, did prices. After dipping below zero barely a year ago, crude prices are now back to their highest level in seven years, and analysts say higher highs are coming.
“We’re probably going to see prices continue to rise through the end of the year unless we see another kind of COVID acceleration,” said Rory Johnston, founder of the Commodity Context newsletter and managing director at Toronto-based investment firm Price Street.
Normally, oil prices tend to ease off in the winter as demand for driving and flying in the northern hemisphere declines. But COVID has thrown the normal seasonal patterns completely out the window.
“Because of all of the pent up demand and these random reopening paths we’re on globally, it’s really hard to … ascribe a very normal seasonal pattern,” Johnston said. “I think it still is yet to be seen whether or not that happens.”
Edward Moya, an analyst at foreign exchange firm Oanda, says crude prices could have a lot more room to run.
“The oil market is still heavily in deficit and that will likely be the story over the winter. If the north has a cold winter, the prospects of $90 oil seem very likely.”
Global energy crisis
Higher pump prices are probably the most obvious example that consumers notice, but in reality, what Canadians pay at the gas station is only now catching up to what the rest of the world has been seeing in energy for a while now. Put simply, the price of everything is skyrocketing.
Natural gas prices are skyrocketing in Europe and Asia in recent months as demand has increased at a time when supplies have never been lower.
The fall has been colder than normal across much of Europe, causing Europeans to reach for the thermostat. But supplies are lower than usual because exports from major suppliers, such as Norway and Russia, are down.
According to data from Gas Infrastructure Europe, the association for gas companies on the continent, storage tanks are almost one quarter empty right now. Typically at this time of year, they would be full to the brim in advance of the cold months to come.
Natural gas prices have increased more than fivefold in recent months, and more hikes are expected.
Europeans aren’t the only ones short on gas either; China finds itself with a voracious demand for energy, too, which is causing gas exporters to go to the highest bidder. Rolling blackouts and shuttered factories are the norm in China right now, as the world’s most populous country is having trouble keeping the lights on as things reopen from COVID-19.
It’s gotten so bad that it has declared a temporary truce in its ongoing trade war with Australia, because it is so desperate for coal.
WATCH | Why the U.K. seems to be running out of gas
Severe gasoline shortage at pumps in the U.K.
10 days ago
Britain is trying to find 5,000 truck drivers to deliver gasoline to stations, even issuing temporary visas to Europeans to help ease supply chain problems. (Jon Super/The Associated Press) 1:36
Utility bills expected to rise in B.C., Ont.
While drama like that hasn’t happened yet in North America, consumers should expect their bills to rise.
B.C.’s main gas distributor, FortisBC warned customers in September that the average bill is set to go up between nine and 12 per cent starting this month. And Ontario’s biggest gas company, Enbridge, has applied with the province’s regulator to increase what it charges consumers starting in January.
“As if we don’t have enough sources of inflation pressures flaring,” Bank of Montreal economist Doug Porter said in a note to clients on Thursday.
Soaring demand around the world “points to higher prices ahead for Canadians to heat their homes this winter,” he said.
Kit Juckes, a strategist with French investment bank Société Générale, says energy prices are spiking so much that he expects governments around the world may eventually have to step in.
“How much governments will end up subsidising gas use will vary from place to place,” he said in a note to clients on Wednesday.
“In the longer run, we don’t think current prices are sustainable, but the short run will matter more in the weeks ahead.”
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
