Summer driving season is over, so will gas prices go down?

Every May we are warned to brace ourselves for higher gasoline prices as the summer driving season begins. There were points this past summer when a litre of gasoline costonly a few cents less than in the summer of 2014, even thoughcrude oil was half the price.

With our summer road-trips now in the rear-view mirror, what'snext for pumpprices?

Fall usually means somerelief at the gasoline pumps. Demand is lower andrefineries begin to blend less-expensive winter gasoline.

However, there's notmuch hope that this fall will follow the well-worn path of lower gasoline prices.As of Sept.15, that winter gas has goneon sale, and the summer driving demand has fallen off,but prices at the pumps have dropped just a penny a litre on average.

So what's going on?

The gasoline market has been a tricky one to follow over the 16 months since oil prices began to drop. The price of a litre of gasoline bottomed out at 91 cents a litre the week of Jan.13, 2015, when oil was $46 US a barrel and the Canadian dollar was still 83 cents US.

The companies are free to charge whatever they want, safein the knowledge that no one is able to provide a spotlight on the pricing makeup.- Dan McTeague, GasBuddy.com

Since then, oil has traded up in the $60s, down in the $30s, and gasoline markets havesometimes paidclose attention to the price of crude and at other times, seemed to completely ignoreit.

The swing factor over the past several months has been the refining industry. Refineries have seen theirtake from alitre of gasoline increase from 12 cents the week that gasoline prices hit bottom in Canada tonearly 30 cents a litre in July, when Natural Resources Canada stopped releasing its weekly fuel report because of the election.

• Why is NRCan's fuel price report suspended during election?

• Oil prices are down, gasoline prices are not. What gives?

The money has been so good in refining that there's been a reluctance to do semi-annual maintenance,but that maintenanceis about to start in earnest in October. Lower demand for crude oil feedstockwill likely drag oil prices down further, but will not ease gasoline prices.

"The lower crude prices go, the more panicked oil companies get," said Roger McKnight, a senior petroleum analyst with En-Pro.

"Theytry to save their upstream (exploration) bottom line, by putting it to the downstream part of the company, which is refining and marketing."

Storage getting full

This is also the time of year when the amount of oil in storage starts to increase, as refineries slow down. Storage at the Gulf Coast was already at record highs last week, storage at Cushing, Okla.,has been slowly draining, but is still at nearly 70 per cent capacity.

The investment bank Altacorp Capital said 669,000barrels perday of refining capacity in the U.S. Midwest will be offline in October. That oil will likely end up in storage containers at Cushing, raising questions as to whether tanks willfill. Canada sends approximately 2.1 million barrels of crude oil a day to the U.S. Midwest.

"In times like we are now when storage is more full in North America that ithistorically has been, that makes a bad situation worse,"said Rob Mark, an energy analyst with 3Macs.

"Could we have weak prices and ugly inventory levels in the third quarter? Absolutely, I'd be surprised if we didn't."

Refinery margins a black hole

The question is whether those weaker prices will flow through to the pump. With the informationblackout at Natural Resources Canada, it's not clear where refiningmargins are right now.

But even if we did have that information, it's nearly impossible to tracethe wholesale price of gasoline back to the price of the crude oil feedstock that goes into the refineries in the first place.

"The only information we have is from private-sector organizations that work for theoil industry itself," said Dan McTeague, a petroleum analystat GasBuddy.com. McTeague is a former politician and longtime agitator for more transparency in the gasoline market.

He saidthat over the past weekend, Canadians paid 8.7 centsmore per litrethan the world price, once you strip away currency changes, taxes and tolls.

"The companies are free to charge whatever they want," said McTeague. "Safe in the knowledge that no one is able to provide a spotlight on the pricing makeup."

"We're told as Canadians that we should always be prepared to pay the world pricefor fuel. I don't have a problem with that, but you can see why the public is up in arms about this when you see these kinds ofdifferentials."