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Crude oil and gasoline historical pricing trends Only weeks after the International Monetary Fund (IMF) warned of a “permanent oil shock” and high energy prices for 20 years to come, crude oil and gasoline prices set new records worldwide. M.J. Ervin Associates reported that by August 16 Canadian average gasoline prices reached $1.04.5 per litre, driven by world oil prices that climbed above $65 US per barrel ($77.66 Cdn). On a constant-dollar basis, the weekly gasoline price easily surpassed the previous Canadian annual average price record set in 1985. The annual average price that year was 51.4 cents per litre — or 87.4 cents in constant 2005 dollars. Although current prices are only weekly averages, they appeared to be on course to set a new record for the annual average. Crude oil costs were the overwhelming factor in the surge that drove up gasoline prices and appeared very likely to have the same impact on winter heating oil. Meanwhile, competing fuels such as natural gas were also pushed upward, with gas reaching $9.50 per thousand cubic feet by August 15. (This compared with $2 per thousand cubic feet, or less, during most of the 1990s.) Upward pressures on oil prices seemed to multiply through the summer as the world steadfastly maintained crude consumption of more than 80 million barrels per day (bpd). In late August, Hurricane Katrina struck the United States Gulf Coast, forcing shut-ins of offshore oil production and inflicting damage on many of the coastal refineries, as well as on the Louisiana Offshore Oil Port, the largest oil import centre in that country. Amid supply concerns, oil and gasoline prices jumped. Another push came from growth in the economies of developing nations, which increasingly soaked up nearly all spare capacity in world oil production. The Chinese economy was the biggest single factor, with economic growth rates approaching 10 per cent per year. The BP Statistical Review of World Energy noted that Chinese oil consumption grew by 16 per cent, or 900,000 bpd, in 2004 and the IMF named China as the leading driver in predicted world annual consumption increases of 2.1 million bpd. The U.S. Energy Information Administration (EIA) placed consumption growth at 2.7 million barrels per day in 2004, a figure that did not compare favorably with its own estimate that the world’s total spare production capacity is now just over one million bpd.
 
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