Will gas prices drop ahead of the Thanksgiving long weekend?

The Thanksgiving long weekend is a few days away, and although there may be some relief at gas and diesel pumps for consumers and businesses after some European countries released strategic oil reserves, gas price experts say it’s becoming harder to predict where prices are heading.

More oil being brought to markets would normally be expected to shift gas prices down, but rising geopolitical uncertainty and volatility mean things can change fast.

“It’s a very unique day that we can’t predict more than several days out, at least accurately, because of the way the market can move,” says petroleum analyst Patrick De Haan at GasBuddy.

“This is a very uncertain environment, and so while I’d hope prices may drift a little lower, there certainly is the possibility that that news could change in a very quick moment.”

Gas prices, and especially diesel, have skyrocketed ever since the war with Iran began in February, as well as the war between Russia and Ukraine, which has been ongoing since 2022.

Threats of strikes from Iran in the vital Strait of Hormuz shipping channel have impacted about 20 per cent of the world’s crude oil supply that normally goes through that route, combined with damage to oil and energy facilities in the Persian Gulf region amid the months-long conflict.

In the case of the Russia-Ukraine war, Russia is one of the world’s largest producers and suppliers of diesel, and much of its diesel exports have been knocked out from strikes to facilities. This is also one of the main reasons why diesel prices have been rising at a faster pace than regular gas.

Oil prices are set globally, mostly based on expectations for demand and current or near-term supply levels, while local gas prices take into account these oil prices as well as local costs, fees and taxes.

The price for U.S. crude oil, known as West Texas Intermediate, was about US$90 per barrel, as of publication, up from $88.50 on Friday morning and down from a recent peak of nearly $106 on Sept. 15.

The Canadian national average for regular grade gasoline was about $1.78 per litre on Monday, according to CAA, up from $1.74 last month and from $1.33 a year ago.

Since last week, the national average price per litre for regular gas has seen very little change — even after news that more oil was being brought to market by tapping into the strategic reserves of some G7 nations.

The Group of Seven industrial nations, mainly Germany and France, said Friday that they plan to release 100 million barrels of oil and fuel products in the coming weeks, starting with “substantial” amounts of diesel after the fuel recently hit record high prices.

Diesel prices in Canada are currently hovering around a national average of $2.55 per litre, according Dan McTeague, president of Canadians for Affordable Energy, down about four cents from yesterday.

McTeague also says diesel prices have nearly doubled from last year.

De Haan says whether or not these additional barrels from G7 nations help to bring down prices over the long term is very hard to predict.

“If these reserves don’t meaningfully increase supply, then there may be very little impact from them, and the market will eventually respond in watching and following the data,” says De Haan.

“So for now, prices are drifting a little bit lower, but much of the decrease in prices has been essentially market manipulation.”

The move to release strategic oil reserves followed threats from U.S. President Donald Trump that the U.S. would ban exports of diesel fuel unless other countries release more reserves from strategic stockpiles.

An increase in oil supplies globally typically brings lower prices, but there are other factors, like cold weather, which may offset those expectations.

McTeague adds that he expected diesel prices to increase about two cents by Wednesday.

As temperatures drop, demand for diesel fuel in particular tends to spike because of its wide use for heating homes, in addition to being the backbone of logistics by fueling trucks and industrial equipment, as well as some trains and ships.

“The world is in a very precarious position as it relates to diesel, just at the very moment which the world starts to use more, not just for agriculture, not just for mining and pretty much every other mode of transportation, but also for fuel oil, for heating oil, for furnace oil. So this is the time of year where traditionally diesel prices go up,” says McTeague.

“Diesel prices in Canada could approach or pass $3 a liter at some point, meaning of course, furnace oil, keeping people warm in this country is going to be difficult.”

De Haan is also somewhat skeptical that using more strategic oil reserves will necessarily translate into sustained diesel price relief for consumers and businesses.

“There could be more risk down the road because this does not solve the problem that has created the elevated prices to begin with.”