Uncertainty shapes Canada’s fuel sector
If there is a constant right now in world markets it is that of uncertainty.
Tariffs imposed by U.S. President Donald Trump are causing supply-chain disruptions beyond the shores of the United States, raising concerns of a slowdown in world economies as consumers react to rising prices. Many are cutting back on their spending, from eating out to travelling.
The U.S. Travel Association, a national, non-profit organization representing the travel industry south of the border, worried early this year that the bellicose rhetoric coming from the White House and the imposition of tariffs on Canada, would precipitate a drop in travel to the United States. It forecasted that a 10% reduction in Canadian travel could mean two million fewer visits, $2.1 billion in lost spending and 14,000 job losses. Expedia, the popular online travel booking site, has noticed an increase in the number of Canadians booking summer travel to destinations in Canada, foregoing traditional popular destinations in the United States. And the Tire and Rubber Association of Canada finds that this year, 88% of Canadians would rather take road trips within Canada than venture to the U.S., and only 8% plan to cross the border as of the time of the survey.
“Fifty-one per cent of drivers cancelled road trips to the U.S. they had planned for this year. Within Canada, 69% plan to take a road trip within their province, while 28% will drive to another part of the country.”
In addition, Canadian residents returning by automobile from the U.S. in April fell on a year-over-year basis for the fourth consecutive month, according to Statistics Canada. The 1.2 million trips represented a 35.2% drop from the same month in 2024 and 45.1% lower than April 2019, before the pandemic.
Making it easier for Canadians to take these road trips in Canada is paradoxically the uncertainty in the oil markets, helping push gas prices down.
At press time, OPEC+ is increasing oil production, raising output in June to some 411,000 barrels per day. This has pushed the price of a barrel of oil to what is now a new low over the past four years, with prices in early May for Brent crude to $60.23 a barrel, and U.S. West Texas Intermediate crude to $57.13 a barrel. Both benchmark prices at the time were at their lowest levels since February 2021.
“OPEC+’s about-face was not something that we anticipated even just a couple of months ago,” said Patrick De Haan, petroleum analyst with GasBuddy. “Rewind back to 2023, OPEC+ decided to cut production because of the low price of oil back then, in the mid-$60s, and now it has changed course … As a result, oil prices have obviously fallen to their lowest since the pandemic, and that’s something that may continue unless there is another about-face or shift in policy.”
Along with other factors, this is causing prices at the pump to fall.
According to Kalibrate, retail gasoline prices in Canada had seen significant price drops in April, falling some 20.2 cents per litre from the same time in March. Kalibrate said that while some of the drop in price was due to the removal of the carbon tax, prices continued to fall afterwards.
“Prices continued to fall in April, reaching as low as 137.0 cents per litre by mid-month— the lowest price since August 2021—as crude oil prices sharply decreased following Liberation Day tariff announcements by U.S. President Donald Trump,” Kalibrate wrote.
While there is still the potential for a ruinous trade war to erupt between Canada and the United States, experts agree that OPEC+ will increase oil production further, adding to global supply and pushing down gasoline prices.
All of this is advantageous to drivers who are looking to indulge in domestic travel, which in turn means more profit for gas station operators and their convenience stores.
Also, there are going to be changes coming to the convenience landscape with the recent announcement of Parkland Corp. being acquired by Sunoco LP.
Linda Thompson, managing partner at Fuel Partners, sees new opportunities for the two players’ retail convenience and fuel operations. How it plays out is much too early to tell. Thompson says Parkland’s On the Run convenience operations may see an infusion of investment, expanding their footprint in Canada and the United States, and using the combined companies to expand the offerings in the stores; or an expansion here in Canada of Sunoco’s convenience retail operations, giving more options to Canadians, along with a possible rebranding of some existing gas banners in Parkland to Sunoco.
“I think you are going to see everything getting a strategic review going forward, around loyalty programs, innovation around retail and who’s bringing what to which side of the border,” she adds.
Now, this could all change because of the ultimate volatility in the global market right now. If crude oil prices fall too low, the major players in OPEC+ could decide to curtail production to raise prices and profits. If high tariffs remain in place, rising consumer prices could tip economies into recession; or at the very least cause consumers to further pull back on spending, one of which would be to cut back on travel.
