When vacations influence oil prices

Ashleay: Welcome to iA Financial Group's In Your Interest podcast, where we aim to share with you the essentials of economic news and its impact on your finances. My name is Ashleay, and this week we're talking about the anticipated rise of gasoline prices as vacation time arrives. Coincidence or oil company strategy? Hi, Sebastian.

Sébastien: Hello, Ashley.

Ashleay: So we're live. We are at the lounge and we have created a summer edition of our podcast just for you guys.

Sébastien: Yes, small bytes of information.

Ashleay: Bytes of information so you guys can go enjoy the pool and enjoy the pool of information that is Sebastian. So, Sebastian, is it true that gas prices always go up on the eve of summer vacations?

Sébastien: Well, actually, no. It's a myth. And there were some studies recently over the last decade by the CAA, among others, that showed that gas prices are just as likely to go down as to stay the same or to go up during the vacations. There are many factors that impact gasoline prices. And the most important one for us is very likely geopolitics. Like last year, the war in Ukraine pushed commodity prices higher. OPEC decisions, you know, the big oil producing countries want sometimes to protect their market share. Sometimes they want to target their profitability so they might cut or raise production. International tensions also could affect transport. The outlook on the Chinese economy is always a big factor. So this is not, you know, linked to the summer or the fall or the winter or the spring. It just happens when it happens. If we're getting close, it's maybe the supply and demand dynamics. We know that in the summer the demand for gasoline rises because we travel a bit more. This is putting some upward pressure on prices sometimes. But, you know, oil producers, they see that coming. They raise their inventories ahead of the summer just to mitigate the impact on the prices. But, you know, investment in exploration. Now the US is the world's leading producer of oil, so it's less sensitive to geopolitics. There it’s more about the cyclical nature, the profit margins, the investment and, you know, the investment over the last few years in production capacities. The list is long of factors that can determine the dynamics of gasoline prices. But of course, it's normal for travelers to be worried with good reason, because the budget for gasoline during vacations can be sizable. And, you know, you still go to the same place, you still drive as many miles or kilometres. But, you know, if gasoline costs more, that becomes a tax on your discretionary spending. So the spending on the fun stuff, that's why we will always be sensitive. But it seems that there is no direct link between, you know, summer vacation and gasoline prices.

Ashleay: Wow. Okay. Well, thank you for sharing, Sebastian. To all our listeners, thank you for being here. Once again, if you enjoyed this episode, we invite you to share it with your friends and family or give your opinions on Apple, Spotify or Google podcast listening forums. If you feel like it, send us your comments and suggestions to mrk-promo@ia.ca. Thank you and see you next week. Love this podcast. Want to know more about economic news? Follow our In Your Interest podcasts available on all platforms. Visit the Economic News page on ia.ca or follow us on social media.