The current spike in gasoline prices has brought prices at the pump to the highest they have ever been. In just over a week, the price per litre in Ontario has jumped nearly 25 cents and is hovering in the $1.80 a litre range in many places. In Thunder Bay, the price briefly touched the $2 a litre mark at several gas stations but has since settled to about $1.95 a litre. This spike is an exuberant uptick that is part of a long upward trend in prices which in recent years has been reinforced by new carbon taxes.
The accompanying figure plots the monthly price of regular unleaded gasoline at self-service filling stations for Thunder Bay, Toronto, and Ottawa over the period 1990 to 2022. The data up to January 2022 is from Statistics Canada while the last two months are calculated from a gasoline price website. All three series track together quite closely. Prices were flat in the just below 60 cent a litre range for most of the 1990s and then underwent a significant ascent to Spring of 2008 when they came down. Since then and until the start of the pandemic prices have gone up and down together in all three cities bouncing between 80 cents a litre and just over $1.40 but were most often at $1 or more a litre. The pandemic saw another drop in gas prices back to the 80-cent level and then recovered back to the $1.40 range. The current spike is quite evident for all three cities at the far right of the chart.
While the graph shows Thunder Bay’s gasoline prices nicely tracking the other two cities, the scale of the diagram masks the fact that the differential between Thunder Bay gasoline prices and that of the other two cities has grown over time. During the 1990s, the average price per litre in Thunder Bay was about 4 cents higher than Toronto and 3 cents higher than Ottawa. During the 2000s and the 2010s, the price in Thunder Bay average 5-6 cents more than Toronto and about 7 cents a litre more than Ottawa. For the pandemic period of 2020 to 2022, Thunder Bay’s price per litre has averaged 11 cents more than Toronto and 12 cents more than Ottawa.
Notwithstanding the demand and supply shocks of the international energy market, the price of gasoline in Thunder Bay has gradually grown faster than that of the other two major Ontario cities in the Statistics Canada gasoline price data set. Moreover, that differential has spiked since the start of the pandemic. Why? While no doubt local gasoline purveyors will argue that it has to do with rising costs and supply chain issues, the reality is that casual observation over the years reveals that over the last decade the number of gasoline retailers in Thunder Bay has shrunk considerably. While that has been a process underway in many cities, it is particularly noticeable in Thunder Bay now as the relative lack of competition has allowed prices to be higher than they otherwise need to be.
