Fuel costs on P.E.I. may keep climbing as Middle East war continues, experts say

Fuel prices on Prince Edward Island rose overnight Wednesday, and energy experts say more increases could be on the way if tensions in the Middle East continue.

In an unscheduled adjustment, the Island Regulatory and Appeals Commission raised the minimum price for regular gasoline by 6 cents per litre to $1.54. Diesel increased by 9 cents to $2.04, while the maximum price for heating oil rose by 8 cents to $1.45.

IRAC said it made the unscheduled change in response to market conditions and help ensure petroleum prices remain fair for consumers, wholesalers and retailers.

“Global markets are currently experiencing high volatility in response to geopolitical tensions abroad,” the commission said.

The adjustment comes days after a sweeping U.S.-Israeli attack over the weekend that killed Iran’s supreme leader and pulled about a dozen other countries into the conflict.

Canadian energy and climate journalist Markham Hislop said fuel prices in Canada could continue rising depending on how long the conflict lasts. U.S. President Donald Trump has said he foresees a military campaign lasting four to five weeks.

“The longer it goes on, the higher prices will rise,” Hislop told CBC’s Island Morning on Wednesday. “Canadian prices are tied to global prices, and if they rise to the global level, then we'll see them rise domestically.”

Petroleum analyst Matt McLain of GasBuddy said one major concern is the Strait of Hormuz, the narrow mouth of the Persian Gulf and one of the world’s most important oil transit routes.

About 20 per cent of the global oil supply passes through the strait. However, military activity in the area has disrupted shipping, and Iran has warned vessels not to pass through the waterway, leaving many oil shipments in limbo.

“There are a lot of ships that have dropped anchor on either end of the strait and not moving at this point, and so that creates, potentially, in the coming days, a little bit of a hiccup,” McLain said.

“Anytime you have an issue that creates a hiccup like this, it ripples through the overall pricing market for crude oil.”

McLain said if the Strait of Hormuz returns to normal operation, prices could eventually ease, although the likelihood of that happening in the next few days is uncertain.

Hislop added that higher gasoline and diesel prices are usually passed on to consumers.

“We're probably going to see higher prices in the grocery store, we'll start seeing higher prices for consumer goods," he said.