Ontario Gas Prices Could Return To $2 A Litre In Early 2023 & Here's What's Causing The Spike

The top of 2023 has seen Ontario gas prices sit well within the realm of affordability. However, like last year, things are expected to get much pricer as the months drag on, with one expert already warning drivers to prepare for a return to $2 a litre.

Gas analyst Dan McTeague told Narcity that the "dramatic drop" in prices the province saw at the pumps in early December, though blissful, can be attributed to risky bets on energy stocks that he says are being made in "complete ignorance of fundamentals."

"Energy bets are being done by money managers (non-commercial players) who aren't involved with the physical trade of oil, gas, gasoline, diesel, propane, etc.," he said.

For those of you wondering what an energy bet is, McTeague said, "the market is known as the 'futures energy markets' it's like the stock market but it's a stand alone in which players/investors participants anticipate what the price of fuel should be for future delivery."

McTeague argues that current wagers on stocks are being based on unreliable factors, including the spread of COVID-19 in China, inflation, fear of a recession and demand destruction rather than supply and demand.

"Lower prices have stimulated demand at a time when energy products supplied continue to be challenging," the gas analyst added.

As for the potential for pumps to reach $2 a litre again, McTeague said that prices could see a significant spike due to a "higher oil demand," an argument he claims is supported by the International Energy Agency (IEA).

The agency stated in a December report that global natural gas markets are still being affected by Russia's cuts to pipeline deliveries of gas.

"If gas exports from Russia drop to zero and China's LNG imports rebound to 2021 levels, there is a risk of a shortfall gas supplies in 2023," the IEA report reads.

McTeague concluded that rising carbon taxes, Canada's weak dollar and colder weather would put even more strain on supplies, causing prices to leap throughout winter.