Economics An Overview – Adam Norman
April 9, 2022
Drastic Rise in Gas Prices
A View of Why Fuel Prices are Increasing
Brayan Javier Ibaceta Velarde
Seneca College
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Economics An Overview – Adam Norman
April 9, 2022
Drastic Rise in Gas Prices
To get an idea of how the price of oil and gas has been changing over recent years, it
should be clarified that this change began as a result of the arrival of the pandemic in 2019 with
the Covid-19 virus. , this disease forced the population around the world to take refuge in their
homes, to reduce the spread of the virus, which immediately generated a change in the demand
for fossil fuels, since people used cars much less to move at the same time Air travel to the
interior and exterior of the country was also drastically reduced, therefore fuel prices decreased
due to low demand. However, all this changed when the prohibitions in different countries were
softened thanks to the arrival of vaccines and the decrease in deaths due to the virus, this
inevitably led to an increase in demand and consequently an increase in the price of fuel. (Picchi
A. 2022)
It should be noted that the current economy depends on a globalized world, where all
countries trade with each other, it is for this reason that the most important reason for the current
rise in fuel prices in the world is due to the start of the war between Ukraine and Russia,
however, it is appropriate to mention that the price increase does not respond to the war per se,
but rather responds to all the sanctions that the mostly Western countries have imposed on the
Russian country, which is undeniably one of the main oil and gas producers in the world (Hopper
T. 2022). I believe that these sanctions were issued with the sole purpose of damaging the
Russian economy, in this way the western countries believe that a strong blow to the Russian
economy would make them stop the advance of their troops in Ukraine, however, it seems that
all the sanctions they had a rebound effect and it is currently the sanctioning countries, especially
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Economics An Overview – Adam Norman
April 9, 2022
the European bloc, who are having a worse time than the sanctioned country due to the
vertiginous rise in inflation of its member countries (Inflation 2022).
By removing a large amount of Russian oil from the international market, due to the law
of supply and demand, prices will rise because the product on offer is in short supply, this means
that by suddenly withdrawing millions of cubic meters of oil from the market, buyers will be
forced to fight for the remaining oil, and this undoubtedly causes a rise in fuel prices (Hopper T
2022). “The market sees (the invasion of Ukraine) as an incredible degree of instability,” said
Kevin Birn, the chief analyst of Canadian oil markets at IHS Markit. “And so, the price of oil is
being bid up as people are increasingly uncertain about the availability of Russian crude going
forward.”. (Birn K 2022)
This sanctioning measure against Russia and the growing demand for fuel due to the
progressive exit from the confinement caused by the pandemic are the main causes of the current
rise in fuel prices throughout the world, although Canada is not as dependent on Russian oil as
Europe is, the rise in prices has also affected the country because it is a trading partner of the
United States who does import a considerable amount of oil from Russia, that is why in a conflict
thousands of kilometers away, there are raising prices of oil Also in North America (Evans P.
2020). Dan McTeague, president of Canadians for Affordable Energy argues that Canada's
reliance on US refineries is once again a major factor in why Canadian drivers are paying more.
"We price all of our fuel in US [dollars] ... and that makes the bad situation worse, which is why
we're looking for an increase of at least five to six cents per liter."(McTeague D, 2022).
In my opinion, the main solution to this new global crisis is to find a solution to the main
cause, which is the armed conflict between Russia and Ukraine, although the armed conflict is
not the exact cause of the price rise, the sanctions imposed on Russians are. Therefore, a
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Economics An Overview – Adam Norman
April 9, 2022
consensus between the sanctioning countries and Russia would be the best short-term solution to
end the current crisis, although this does not seem to be the solution that world leaders plan to
make. Another possible solution to the crisis, although it would be one in the medium and long
term, would be to progressively stop depending on oil to mobilize within the city, since oil is a
product that has a volatile price and is constantly changing, and such as we have seen, its price
can vary depending on the extent to which the main players in the market are affected by a
conflict of any kind. It is vital to gradually eliminate this dependence on other forms of energy
that do not depend so much on this factor.
According to a survey published in the national post, it states that the majority of
Canadians think that high fuel prices are here to stay, which is why many of those surveyed were
considering purchasing a vehicle that does not depend on fossil fuel (Suhanic G. 2022).
According to the global news chain, Canadians are beginning to change their habits when
traveling from one place to another, there is an increase in the use of public transport in different
cities in Canada, as well as an increase in the purchase of bicycles, which undoubtedly reveals a
concern for the Canadian people to reduce the use of their vehicles due to the high price of fuel.
(Lavery I, 2022). There is no doubt that the best solution in the medium and long term is to
reduce or replace the use of motor vehicles that work with fossil fuels, for vehicles that use
renewable energies, in this way in the face of a next world crisis, the population can be more
protected and prepared for an imminent rise in prices and consequently an increase in inflation.
In conclusion, the growing demand for oil due to the gradual return to normality after the
fierce attack of the covid-19 virus added to the sanctions imposed on one of the largest oil and
gas producers in the world has led to these products suffering a significant increase in their
prices, due to the high demand that exists and the low availability of the product, as a conclusion,
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Economics An Overview – Adam Norman
April 9, 2022
prices throughout the world, even in oil-rich producing countries such as Canada, suffer from the
rise in prices, this reveals the vital importance of changing our transportation methods that use
fossil fuels for others that use renewable energies.
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Economics An Overview – Adam Norman
April 9, 2022
Works cited
Connolly, A. (2022). Global News Website. “Calming global uncertainty key to easing soaring
gas prices, says natural resources minister”. from
https://globalnews.ca/news/8676211/canada-oil-price-spike-uncertainty/
Dawson, T. (2022). National Post Website. “As gas prices soar in wake of Ukraine war,
Canadians could see cost of goods go up”. from https://nationalpost.com/news/canadianeconomy-faces-inflationary-trend-as-gas-prices-soar
Evans, P. (2022). CBC Website. “Gasoline has never been more expensive — and high prices
are likely to stick around for a while”. from https://www.cbc.ca/news/business/gasprices-friday-1.6371492
Hopper, T. (2022). Driving Website. “Why Canadian gas prices are higher than ever (it's not all
Ukraine)”. from https://driving.ca/auto-news/driver-info/why-canadian-gas-prices-arehigher-than-ever-its-not-all-ukraine
Inflation (2022). Historic harmonised inflation Europe – HICP inflation. From:
https://www.inflation.eu/en/inflation-rates/europe/historic-inflation/hicp-inflationeurope.aspx
Lavery, I. (2022). Global News Website. “Rising gas prices drive Canadians to bike-buying and
public transit”. from https://globalnews.ca/news/8679063/gas-prices-canada-impact/
Picchi, A. (2022). CBS News Website. “3 reasons why gas prices are so high — and when they
might come down”. from https://www.cbsnews.com/news/gas-prices-high-expensivecome-down-cbs-news-explains/
Suhanic, G. (2022). Finantial Post Website. “Posthaste: Majority of Canadians believe that high
gas prices are here to stay”. from https://financialpost.com/executive/executivesummary/posthaste-majority-of-canadians-believe-that-high-gas-prices-are-here-to-stay
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