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Gas prices in parts of B.C. could reach $1.70 per litre by summer, analyst predicts

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shutterstock_692687404Drivers can expect a jump in gasoline prices this week, thanks to a five cent increase from wholesalers, analyst Dan McTeague said.

He expects most cities in B.C. to see a two-cent rise, but central B.C. could get more of a hit. Retailers there have been skimping their own margins to compete, but “some have now thrown in the towel and decided to increase by 10 cents,” he said.

This week’s wholesale increase was caused by the deep cold in Texas and central U.S., but McTeague sees market forces pushing prices higher mid-year.

By summer, McTeague estimates gas could be as high as $1.70-per-litre in the Lower Mainland, and $1.38-per-litre elsewhere in the province.

There are three factors leading to his prediction: summer driving demand, decreased global production and increased carbon prices.

Last year as the COVID-19 interrupted the world, producers got left with barrels selling at minus numbers and nowhere to store them to wait out the market drop. That’s made producers shy, and financiers hesitant to fund oil plays, McTeague said.

The NDP also has a scheduled carbon tax increase, which was postponed in 2020 due to COVID-19. Once things start getting back to normal, McTeague expects the government to double up the planned increase with two years-worth in one, for a total of 2.5 cents-per-litre.

B.C. is affected by two key oil markets. The Lower Mainland and Vancouver Island is fuelled by the Pacific Northwest market, while the rest B.C. is supplied from the Trans Mountain Pipeline which is priced in the Chicago Spot Market.