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Soaring oil prices

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Canadians are paying more for gas at the pump and for higher heating oil bills thanks to international factors, such as geopolitical instability, natural disasters and a growing industrial and consumer demand for crude oil—especially from India and China.

In 2001, the price of oil was at a low US$15.95 a barrel. Over the next couple of years, oil prices climbed significantly and rapidly, as the Organization of Petroleum Exporting Countries cut production, the Chavez government in Venezuela changed the oil industry there, and war began in Iraq.

Then hurricanes hit the U.S. Gulf Coast in 2004 and 2005, damaging offshore drilling rigs and closing refineries. Hurricane Katrina in August 2005 significantly disrupted oil and natural gas production and delayed deliveries. By the fall of 2006, the price of oil had climbed to US$77 a barrel.

This has translated into higher prices for Canadians. From 1990 to 2006, the consumer price of household heating fuel oil increased 123%. Retail prices have more than doubled in every urban centre since 1990. Prince Edward Islanders in Charlottetown and Summerside paid the lowest average annual price in 2006, at 78 cents a litre, whereas residents of Victoria, British Columbia were paying the highest heating oil prices in 2006, an annual average of 94 cents a litre.

Gasoline prices rose 57% from 1990 to 2006. The annual average retail price of regular unleaded gasoline in 2006 was $1.00 per litre or more in urban centres in all provinces and territories, except Ontario, Manitoba and Alberta. Drivers in Yellowknife, Northwest Territories paid the highest average retail price in 2006, almost $1.10 per litre; Edmonton, Alberta’s drivers paid the lowest price, $0.91 per litre on average.