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OTTAWA - Motorists in Canada can look forward to some relief at the pumps Friday, but experts warn that price shocks are likely to continue in coming days as commodity traders speculate about economic stimulus south of the border.
Gasoline prices are expected to drop dramatically after a big spike at the pumps on Wednesday, according to TomorrowsGasPricesToday.com, a consumer-oriented website that monitors changes in fuel prices.
The cost of a litre of gasoline is expected to fall by anywhere from five to seven cents per litre after midnight, depending on the region, said Dan McTeague, a former Liberal MP and longtime gas-price watchdog who operates the website.
Wednesday's price jolt was the result of little more than energy-producer price gouging, McTeague declared, noting that producers are likely to back off because there's nothing to justify the increase.
"The rapid rise without much explanation had more to do with profit-making by Canada's major oil companies, who constitute a veritable monopoly," he said.
"(They) were clearly jumping the gun on what news might have been developing in the United States with an anticipated decision by the U.S. Federal Reserve today."
But consumers should brace for more price shocks in coming days, thanks to continued speculation that the U.S. Federal Reserve will stimulate the American economy in line with moves made in Europe.
Gasoline prices shot up as much as 13 cents in Montreal on Wednesday to a high of $1.53 per litre, although they dropped back a few cents by Thursday.
There were smaller price increases elsewhere Wednesday, including a spike of 3.4 cents a litre in Toronto where prices averaged 136.8 cents a litre.
Aside from speculators playing with the market, McTeague warned, the real concern is a serious lack of refining capacity that could create a fuel shortage, especially in eastern Canada.
"I'm not just worried about price increases, which we saw without justification this week," he said.
"I'm now concerned about the real scenario in eastern Canada and in some parts of the Prairies that we're going to wind up with shortages and a crisis as far as supply is concerned, both for diesel and gasoline."
Analysts say what could mitigate the potential for shortages is an increase in refining capacity, and a national energy strategy.
Bank of Canada governor Mark Carney made clear his views on the issue last week, in a speech calling on governments and industry to build better energy infrastructure.
"New . . . pipelines and refineries could bring more of the benefits of the commodity boom to more of the country," Carney told a conference of business leaders and international policy-makers in Calgary.
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