Okanagan motorists hit by soaring gas prices, told to brace for worse

Gas prices have spiked around Canada, with record highs being reached in many cities, including Kelowna where a litre now costs $1.59.

It’s a figure that smashed the previous record of $1.57 set last October and will likely rise again, according to Dan McTeague, president of Canadians for Affordable Energy.

McTeague said motorists should anticipate prices in the $1.65 range before Victoria Day weekend due to a variety of conditions.

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Oil, for one, has gone up from where it began at the beginning of the year. Last month it was $74 to $75 a barrel and now it’s pushing somewhere between $87 and $89 a barrel, McTeague said.

But there are a couple of other factors as well.

“The Canadian dollar’s weakness hasn’t helped in the face of much higher oil prices,” he said. “Traditionally, the petrodollar served as a bit of a hedge. We don’t have that anymore and that adds another 10 cents a litre because the Canadian dollar and the US greenback are not in sync.”

Causing a little extra strain, McTeague said, is that the toll rates for the Transmountain pipeline since the natural disasters of November 2021 have also accelerated prices.

“Usually the spread between wholesale prices in Edmonton and here in Kamloops, where there is the terminal, was about anywhere from 11 to 12 cents a liter and now it’s pushing up to 17 cents a litre,” he said.

“So all these things combined mean that gas stations have no choice but to throw in the towel …if you happen to be a gas station today in the Okanagan, without transportation costs, it’s costing you exactly $1.50 to buy your gasoline. You can’t be selling it for $1.42.”

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McTeague also said that Okanagan motorists probably had a longer price buffer than many, given that the Costco gas station had put some downward pressure on prices. That no longer can artificially alter the price.

All in all, it’s an unusual set of circumstances for Canadians, particularly at this time of year.

“The fact that gas went this high in January is something not seen in most of our lifetimes,” he said.

McTeague said he hasn’t seen a price hike in January for 30-some years. Usually, prices tend to rise in February or March as refineries slow down and reduce output, creating a blip in output and supply.

“This is being driven by the fact we are close to an energy superbubble and the price of energy will go up,” he said, adding that there’s growing recognition there’s not enough supply as demand surges coming out of the pandemic.