'Tug of war' on rising, falling gas prices expected in Ontario amidst renewed tension in Middle East

'Tug of war' on rising, falling gas prices expected in Ontario amidst renewed tension in Middle East

Gas prices went up 5 cents Friday with a 1 to 3 cent drop expected on Saturday, according to experts

Ontarians can expect to see a "tug of war" in gas prices as decreasing supply and rising political tension in the Middle East impact costs at the pump, said an expert.

On Friday, gas prices rose about five cents per litre for gasoline and about 13 cents for diesel, said Dan McTeague, president of Canadians for Affordable Energy.

He said the rising prices can be credited to renewed attacks and uncertainty about whether a ceasefire can be reached between the U.S. and Iran.

But those costs might be pushed down as American organizations such as the U.S. Treasury, try to keep costs down by buying "short positions," McTeague said. Short position is a stock market trading strategy, where an investor buys and sells an asset quickly in the hopes of buying them back at a lower price.

"[The U.S.] are trying their very best for political reasons … to keep the price of energy down," said McTeague.

"I suspect that has a lot to do with the Trump administration's interest in making sure that the gasoline and fuel prices don't become an issue as he and his party head for their midterms."

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He expects a slight reprieve in gas prices with a one-cent drop on Sunday. But En-Pro International, an organization that specializes in energy cost analysis, posted on social media predicting a three-cent drop into the weekend.

Back-and-forth attacks between the U.S. and Iran restarted this week after President Donald Trump said Iranian attacks on ships in the Strait of Hormuz signalled the end of the fragile ceasefire and threatened to escalate the conflict if they didn't stop.

Conflict in that region would impact several countries and could halt energy shipments through the strait that are crucial for the global economy.

Large price hike expected if supply remains low: expert

Current low costs are a "short term slight gain" ahead of "long term pain" that will inevitably happen if supply remains low for Canada, the U.S. and several other countries, said McTeague.

"Supply is very low, historically low and demand is extraordinarily high," he said. "They are suppressing the price through manipulation. In the future, markets suggest that we are going to see a correction at some point, but no one knows when."

He said even with active attempts to keep costs low and the Canadian federal government dropping the excise tax, gas is still about 30 cents higher than this time last year.

But those prices will "inevitably" go up as the world struggles to meet demand due to the decrease in supply from the conflict in the Strait of Hormuz.

"The world is going through and used up much of its strategic reserves, its emergency reserves," he said. "Prices aren't really reflecting the severe reality that the world is short 1.3 billion barrels."

Regular people impacted by global politics: residents

"Dirty politicians" around the world are making life difficult for regular civilians everywhere, said taxi driver Ramanuj Bolnick.

He said it's hard to manage the rising costs, especially as a "daily driver" trying to make a living.

Toronto resident Sakib Bhopari said he's had to cut down on other expenses to make up for the price of gas.

"We the general people are suffering for this," he said. "I'm just living day-to-day, so the thing is, we just have to deal with it."

Arrthy Thayaparan is a writer at CBC Toronto with interests in health, climate, education and community stories. You can contact her at arrthy.thayaparan@cbc.ca.