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Think gas prices are high? Diesel is even higher. Here’s why that matters – Global News

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Canadians are paying much attention to the record cost of regular gasoline, but the price for another fuel should also be raising eyebrows, experts say.

Diesel prices are soaring higher than gas, averaging $2.22 a litre on Monday, according to GasBuddy.com. In comparison, regular gas averaged around $1.89 per litre in the country.

Read more:

Will gas prices ever go down? Why Canada is likely to set ‘new records’ at the pumps

Diesel drivers have no doubt been impacted, but that doesn’t mean every other Canadian should disregard its record price at the pumps, said Patrick De Haan, head of petroleum analysis at GasBuddy.com.

“Diesel is really the fuel that powers the economy: semi-trucks, trains, ships in some instances, are all using diesel,” he told Global News.

“This is going to be something that will affect you at the grocery store, at the hardware store, clothing store, electronic store, etc. This is something that will very much become an economic pinch point with the higher cost of fuel to get all of these various goods to the market.”


GasBuddy.com data for May 9 shows the average price for diesel a litre in Canada. Diesel is likely to impact all Canadians, even those who don’t drive, experts say.


Global News Graphic

At this time last year, diesel prices averaged under $1.45 per litre throughout Canada, Statistics Canada data shows. In March 2022, diesel price averages were either near or above $2 a litre in parts of the country. Average prices for April and May were not yet available.

On Monday, the only province that had diesel under $2 a litre in Canada was Alberta, with prices averaging around $1.87 per litre, according to GasBuddy.com.

In Ontario, diesel averaged $2.33 a litre, while Quebec saw prices round out at $2.46 per litre. The highest price for diesel fuel in Canada was in Newfoundland: $2.74 a litre.

“They’re absolutely astronomical,” said Roger McKnight, chief petroleum analyst at En-Pro International Inc., on current diesel prices.

“They’re higher than premium gasoline, which is completely unheard of.”


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Why is diesel so expensive?

Diesel demand has increased as the economy reopens from COVID-19 shutdowns, De Haan said, and oil producers haven’t been able to keep up.

It’s a similar story with gas prices, which have shot up due not only to demand, but also to the impact of the invasion of Ukraine by Russia, a major oil producer that many western nations have punished economically for launching the war on Feb. 24.

But also, several refineries have closed down over the years, resulting in less diesel supply on the market, added De Haan. He cited as an example a Come By Chance refinery in Newfoundland that scaled down operations in 2020. It was bought by a Texas-based equity firm in November with plans to produce renewable diesel and sustainable aviation fuel beginning this year.

“Not only that, but diesel is also competing in a way with jet fuel. Jet fuel, diesel and heating oil are essentially all products that come from the middle of a barrel of oil,” he said.

“They’re similar in ways and they’re different, but they all compete with each other. So, as more planes are taking to the sky, there may be more jet fuel demand and the refinery may produce more jet fuel at the cost of diesel.”


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Every Canadian will be impacted by the high cost of diesel, not just those who own diesel vehicles, said Dimitry Anastakis, a professor at the Rotman School of Management.

Last year, 65,881 new diesel vehicles were registered in Canada, compared with 79,330 hybrid-electric cars and 1,415,361 gasoline vehicles, Statistics Canada data shows.

However, those groceries you just bought at the store that went up in price? They were likely brought there on a diesel-powered truck, Anastakis said.

“Prices are going up not just in terms of the end-use product, but in terms of the transportation system that’s there,” he said.

“In order to keep up with inflation, it’s kind of a vicious cycle, retailers are raising prices and therefore suppliers are raising prices and transportation companies are raising prices, too.”

Read more:

Surging gas prices, Ukraine war pushed inflation to 6.7% in March: Statistics Canada

Diesel fuel is one of the largest costs for transportation operators, said Jean-Marc Picard, executive director of the Atlantic Provinces Trucking Association.

“If this lasts for another few months, we’re certainly going to see the cost of certain goods go up,” he told Global News last month.

“It’s the highest cost in freight, and everything moves by freight.”

Will diesel prices go back down?

Diesel historically cost Canadians less than regular gas at the pumps, but the move to higher prices as inflation rises shows we’re entering a “really volatile period,” Anastakis said.

“Things are going to be up and down and they’re going to be up in terms of costs, and down in terms of what you get for those costs,” he said.

“So this is, unfortunately, a new shared reality of a lot of volatility around these kinds of issues.”


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When it comes to solutions, there’s not much governments can do as oil is a global commodity in worldwide demand, Anastakis added.

“The prices are set elsewhere and they’re global. There are local variations, they are regional variations. But by and large, oil and gas is the one global commodity where there isn’t much leeway in terms of what goes on,” he said.

“Outside of cutting some taxes and offering consumers rebates, … there is not a lot of leeway.”

But, cutting taxes could backfire and result in increased demand, McKnight said. Aside from companies increasing oil production, “demand destruction” could be a way to drop prices, he added.

“If you don’t need as much gasoline or don’t need as much diesel because you’re not consuming as much, prices will come down,” McKnight said.

— with files from Global News’ Travis Fortnum and The Canadian Press

© 2022 Global News, a division of Corus Entertainment Inc.

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Home sales tumble again as mortgage rates surge – Business News – Castanet.net

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Sales of previously occupied U.S. homes slowed for the third consecutive month in April as mortgage rates surged, driving up borrowing costs for would-be buyers as home prices soared to new highs.

Existing home sales fell 2.4% last month from March to a seasonally adjusted annual rate of 5.61 million, the National Association of Realtors said Thursday.

That was slightly higher than what economists were expecting, according to FactSet. Sales fell 5.9% from April last year. After climbing to a 6.49 million annual rate in January, sales have fallen to the slowest pace since June 2020, when they were running at an annualized rate of 4.77 million homes.

The median home price in April jumped 14.8% from a year ago at this time to $391,200. That’s an all-time high according to data going back to 1999, NAR said.

“Without a doubt, rising mortgage rates, rising prices are hurting affordability, but we should not discount that we’re still lacking inventory,” said Lawrence Yun, NAR’s chief economist.

Fierce competition for limited properties on the market and ultra-low mortgage rates superheated the housing market the last couple of years, but now its cooling as homebuyers face sharply higher home financing costs than a year ago following a rapid rise in mortgage rates.

In April, the weekly average rate on a 30-year fixed-rate home loan climbed above 5% for the first time in more than a decade, crimping would-be homeowners’ purchasing power at the outset of the spring homebuying season, traditionally the busiest period for home sales.

Mortgage rates are climbing following a sharp move up in 10-year Treasury yields, reflecting expectations of higher interest rates overall as the Federal Reserve hikes short-term rates in order to combat the worst inflation in 40 years.

With inflation at a four-decade high, rising mortgage rates, elevated home prices and tight supply of homes for sale, homeownership has become less attainable, especially for first-time buyers.

Higher rates can limit the pool of buyers and cool the rate of home price growth — good news for buyers. But higher rates can also limit affordability.

For now, the housing market continues to favor sellers as buyers vie for a still tight inventory of homes for sale, which has kept pushing up home prices. Even as sales slowed last month, it was common for homes on the market to receive multiple offers.

Inventory levels have to go higher before multiple offers dissipate from the market, Yun said. Until then, prices are likely to move higher.

“We anticipate, again, a continuing decline in home sales, but not necessarily home prices,” he said.

On average, homes sold in just 17 days of hitting the market last month, unchanged from March or April last year. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days.

As is typical in the spring, the number of homes on the market increased in April from the previous month. Some 1.03 million properties were available for sale by the end of April, up 10.8% from March, but down 10.4% from April last year.

At the current sales pace, the level of for-sale properties amounts to a 2.2-month supply, the NAR said. That’s up from 1.9 months in March, and down from 2.3 months a year ago.

Real estate investors and other buyers able to buy a home with just cash, sidestepping the need to rely on financing, accounted for 26% of all sales last month, down from 28% in March, NAR said.

Homes purchased by investors made up 17% of sales in April, down from 18% the previous month, while first-time buyers accounted for 28% of transactions, down from 30% in March and 31% a year ago.

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Canadian Real Estate Prices 38% Overvalued, Largest Trend Deviation In 40 Years: BMO – Better Dwelling – Better Dwelling

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  1. Canadian Real Estate Prices 38% Overvalued, Largest Trend Deviation In 40 Years: BMO – Better Dwelling  Better Dwelling
  2. Consumer sentiment in Canada posts biggest drop since pandemic onset amid inflation  The Globe and Mail
  3. One of the Hottest Housing Markets in Canada Turns into Buyers’ Market  Bloomberg
  4. View Full coverage on Google News



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Gas prices in Ontario rising: Best time to fill up | CTV News – CTV News Toronto

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Gas prices in Ontario dropped 10 cents per litre on Friday ahead of the long weekend, but the relief at the pumps is expected to be short-lived. 

The average price of gas in Ontario dropped to $196.6 per litre Friday, which is a 13-cent drop from Wednesday.

However, President for Canadians for Affordable Energy Dan McTeague says Ontario gas prices are projected to rise over the next two days.

“We’re going to see a four-cent increase on Saturday and although the markets haven’t settled yet, it’s pretty clear that we are likely looking at about a two-cent increase (on Sunday). In other words, you got the 10 cents off today, it’s going to go up between now and Sunday by about six cents a litre,” he told CP24 Friday morning.

On Wednesday, gas prices hit a whopping $209.9 per litre, and McTeague says gas prices are set to top that in the coming week.

“Next week, the Americans begin their unofficial kickoff to the summer driving season. That’s going to put a lot of pressure on gas prices for us here in Canada. They are really the ones to determine prices for us, they’re a large market. I would expect that we’re going to be back to $2.10 a litre probably within the next week or so.”

Gas prices have been elevated since late February mostly due to fuel supply shortages amid the war in Ukraine and international sanctions that have been imposed as a result.

For the coming summer months, McTeague says the outlook on gas prices is grim partly because of impending weather issues.

“We may see days where we hit $2.30, $2.25 if we’re lucky. American weather problems in the Gulf Coast tend to be a big deal,” he said.

“The summer looks like average prices will get to $2.15 a litre here in the GTA, and right across most of southern Ontario,” he added.

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