Gas prices in Medicine Hat are around $1.90 per litre. (Photo Courtesy Chris Brown)

By Canadian Press

$1.91.9 in Medicine Hat

Experts torn on if and when ‘demand destruction’ will bring gas price relief

Jun 17, 2022 | 1:11 PM

CALGARY – As North American gasoline prices hit record highs, experts are torn over if and when pain at the pumps might trigger demand destruction.

Demand destruction is an economics term for when prices climb so high they trigger a collapse in demand, which in turn makes prices fall back down.

But while this spring’s high prices appear to be causing a slight pullback in consumer demand for gasoline, some analysts say it’s less than they’d expect.

Patrick De Haan of GasBuddy.com says the return-to-office push in the wake of the COVID-19 pandemic as well as pent-up travel demand means people are still driving.

The national average gasoline price was $2.08 per litre on Thursday. The latest prices in Medicine shown on GasBuddy.com are all around $1.90 on Friday morning. De Haan says significant demand destruction might not take place until prices hit $2.25 or $2.50.

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Those prices are unlikely, but De Haan says they could happen if there’s a significant outage at a major North American refinery this summer.

This report by The Canadian Press was first published June 17, 2022.

The Canadian Press