How Ukraine conflict hits your pocket book; B.C. not subsidizing gas prices

• How bad can things get
• What trickle down effect does high gas prices have

A University of British Columbia Okanagan (UBCO) professor hopes the Russian invasion of Ukraine doesn’t impact the recovery in the Canadian job market and worries we could be approaching the dark days of the 1970s energy crisis.

The price of gasoline has exploded in recent days amidst ongoing heavy sanctions against Russia and the looming concern about the possibility of western nations putting an embargo on oil and gas from that country.

“Coming out of the pandemic, we’re growing right now,” said Ross Hickey, Associate Professor of Economics at UBCO. “Jobs have been increasing so employment numbers are increasing and let’s just hope the trend continues and the price of oil and gas doesn’t take the production of other goods and services offline.”

Hickey believes while the high demand is a good thing because it shows the economy is growing, he doesn’t expect the conflict in Ukraine to be short lived, creating uncertain times.

“We’ve seen job growth in Canada, the U.S. and lots of other advanced economies as we have left the worst days of the pandemic behind us,” he said. “That demand should stay strong particularly in the summer we see a lot of demand for gasoline. That demand should stay strong for consumers not just producers.”

Gas prices are hovering around the $1.76 per litre mark in Kelowna but have raced to around $2.10 in some parts of the Lower Mainland. Hickey said Russia is a major exporter of oil and gas and expects prices to remain high given the increasing global demand and restricted supply. And that’s before any possible worsening of the supply should western nations ban the importation of Russian oil.

“We’re at the mercy of the global oil price when it comes to the effect that has on our gasoline prices. Gas prices are going up because the price of oil is going up,” he said.

He explained the high costs will have a knock-on effect throughout all aspects of the economy because of the transportation costs associated with so many goods and services.

“With inputs going up in general, our transportation costs will go up which increase the costs of bringing goods and services to market,” Hickey said. “That combined with the inflation we have at present is too reminiscent of the 1970’s rising oil prices and slumping or staggering economy.”

No gas relief in sight

On Monday, Alberta Premier Jason Kenney said his province would be taking action on high energy prices by reducing its tax on gasoline.

He said the price at the pump will drop by 13 cents per litre. Some gas stations in the major cities in Alberta were charging around $1.50 per litre over the weekend.

Kenny added the government will deliver a $150 rebate on electricity bills starting April 1.

Meantime, speaking earlier Monday, B.C.'s minister of public safety said the province has no plans to follow Alberta's lead.

Mike Farnworth told a news conference gas prices are driven by events outside of provincial control, such as the Russian invasion of Ukraine, which has upset energy markets around the world. He added there's no simple solution to the rising fuel price situation as the cost rose above $2 a litre in Metro Vancouver.

"The reality is that there is significant instability in the energy markets on a global basis," he said.