Gasoline has never been more expensive — and high prices are likely to stick around for a while

The price to fill up a tank of gasoline has never been higher in Canada, and experts say there's little reason to expect relief any time soon.

The price of a litre of gasoline at the retail level has hit record highs in many Canadian markets this week, with prices under $1.50 per litre becoming harder to find even in oil-rich Alberta. Meanwhile some drivers in British Columbia and Newfoundland and Labrador are contemplating the eye-watering figure of more than $2 per litre for the first time.

Dan McTeague, president of Canadians For Affordable Energy, says the average price of a litre of gasoline in Canada's biggest market, the Greater Toronto Area, hit $1.67 per litre on Wednesday, the highest level it's ever been. And he expects even more to come.

It's an "inevitable response," he said in an interview, "to the threat that the global supply of oil will be further tightened by sanctions on the Putin regime."

Russia's shocking move to invade neighbouring Ukraine has thrown markets around the world into chaos, perhaps none more than the energy market, since the country is one of the largest producers of oil and gas in the world.

Europe is a major buyer of Russian oil, which is a big reason why, so far, the punitive sanctions on the country have exempted energy products. But Vijay Muralidharan, senior consultant at energy analytics firm Kalibrate, says the market is anxious that five million barrels a day may soon be unavailable.

"The war has put fear into the market," he said in an interview. While many factors go into the price of gasoline, the price of crude is the biggest one, so the worry that Russian crude may suddenly become unavailable is causing crude buyers to look elsewhere to ensure a dependable supply — even if it costs them more.

"It freaks you out as a buyer," Muralidharan said. "Even if it doesn't happen, there's paranoia, so you bid up to make sure your supply is there."

Russia supplies about one quarter of the crude oil that Europe consumes every day, but in recent days, some some European oil buyers have shunned Russian crude, fearing that if sanctions were applied to Russian energy, their purchased oil could be rendered unusable.

"Cargoes have already been rejected by European refiners in the market, because people are afraid sanctions might be coming, and so they don't want to be caught with some cargo they can't resell," said Amy Myers Jaffe, research professor and managing director of the Climate Policy Lab at Tufts University.

Canada hasn't imported any Russian crude oil directly since 2019, but that didn't stop the federal government from making a big show this week of banning all such imports from now on. And the U.S. does import hundreds of thousands of barrels a day of Russian crude, some of which may well find its way back to Canada in the form of refined products because the two countries are so integrated.

That's why a conflict a world away is bidding up oil prices in North America, too, because they are all part of a suddenly insatiable and nervous global market

The North American oil benchmark known as West Texas Intermediate hit a new eight-year high just shy of $116 US per barrel on Thursday, and the blend of oil that comes from Canada's oilsands known as Western Canada Select has been rising by almost as much, topping $100 US per barrel at one point on Thursday.

That's the highest price on record for oilsands crude since a brief blip in 2006.