Could ‘demand destruction’ bring gas price relief? Experts are not so sure
Global News
In theory, reaching an unsustainable price would serve as a tipping point and ultimately cause fuel prices to fall, finally offering drivers some relief.
There’s a famous saying that ‘the cure for high prices is high prices,’ but when it comes to gasoline, that may not necessarily be the case.
Experts are torn on when or even if drivers might see significant “demand destruction” – an economics term for a sustained decline in demand for a product due to excessively high prices – at the pumps.
In theory, reaching an unsustainable price would serve as a tipping point and ultimately cause fuel prices to fall, finally offering drivers some relief. But analysts say we’re not there yet even though gas prices are hovering around all-time highs.
“Canada’s gas prices are at inflation-adjusted records. But I continue to be astonished at the high level of demand we’re seeing,” said Patrick De Haan, head of petroleum analysis for the fuel price tracking service GasBuddy.com.
Gasoline prices have been rising since February, ever since Russia’s invasion of Ukraine sent shock waves through international energy markets.
On Thursday, the national average retail price at the pump in Canada was 208.5 cents per litre, a whopping 76 cents higher than last year’s average of 132.2 cents per litre. The country hit an all-time record of 210.8 cents per litre on June 12, according to GasBuddy.
While Canada doesn’t have good statistics on consumer fuel consumption, De Haan said gasoline purchases are likely comparative to the U.S., where federal data shows gasoline demand has backed off only about five to 10 per cent since prices first began to spike earlier this year.
He said that’s surprisingly low, but likely has everything to do with the lifting of COVID-19 restrictions.
Auditor General Karen Hogan says there are critical weaknesses in the integrity controls for the International Student Program.
Return trips by Canadian residents from the U.S. fell 22 per cent in January compared with a year earlier, according to the latest data.
Three byelections are being held on April 13 and the results could have an impact on both the makeup of Parliament and how long it lasts.
Ontario's provincial members of parliament are heading back to Queen's Park Monday, as the legislature sits for the first time since December.
Members of Parliament are back in the House of Commons today, where the government is expected to face tough questions about new auditor general reports and the war in Iran.
Two Air Canada pilots are dead after their flight originating from Montreal collided with a fire truck at New York’s LaGuardia Airport Sunday night.
With more rain in the forecast, crews continue to deal with a mudslide earlier this week that covered a road in Coquitlam in debris, posing risk to Metro Vancouver's water supply.
A former BC Ferries CEO says the Queen of the North sinking remains ‘disturbing’ 20 years later. The ferry struck an island in Wright Sound on March 22, 2006. Two people died.
The 2026 Kraft Hockeyville top two contestants have been named. The winner receives $250,000 for ice rink upgrades, and the runner-up will receive a prize worth about $100,000.
The Office of the Parliamentary Budget Officer scrutinizes federal spending decisions and helps to cost out campaign proposals during elections.
Man’s best friend is proving to be a true lifeline. All across Saskatchewan, service dogs are providing essential, life-changing support every day.
Two days after the first day of spring, parts of Atlantic Canada and Quebec will see another blast of winter with Environment Canada forecasting several centimetres of snow.
UNESCO recognized several Maritime historical groups including the executive director of the Black Loyalist Heritage Centre for their work on the Black Loyalist archive.