Costco may be cutting a few cents off the price of a litre of gas but will it be hit by an expected jumps in wholesale prices that is expected in the spring.

(CARLI BERRY / iNFOnews.ca)

Kamloops drivers have enjoyed some of the lowest gas prices in the Thompson and Okanagan for years because Costco consistently undersold competitors.

Kelowna drivers got a break on gas prices when Costco opened its new 24-pump gas bar there in December.

But those heady days have quickly evaporated as the Kelowna Costco price is now almost the same as what’s being charged in Kamloops by competing gas stations.

And the price is expected to go up dramatically this spring.

“The high prices you’re going to see, and they’re going to be extremely high prices, will be in the middle of April,” Roger McKnight, chief petroleum analyst with En-Pro International, told iNFOnews.ca, Jan. 19. “They’re going to be absolutely astronomical. I wouldn’t be the least bit surprised to see it in the high 80s – $1.88, $1.89.”

On the local level, there is an historical four cent per litre difference in the retail markup of gas between Kamloops and Kelowna, he explained, with Kelowna always being more.

That’s why, after the initial low prices charged by Costco to draw customers to their new station, they’re now selling regular gas for $1.46.9 in Kelowna and $1.42.9 in Kamloops.

That means other retailers in Kamloops are at $1.48.9 while Kelowna retailers are at $1.52.9. In Penticton and Vernon, gas is selling for $1.49.9, according to GasBuddy.com.

Those are historically high prices but are just going to get worse because demand for fuel is far outstripping supply.

The demand for fuel is up 27% over last year, which puts it at about the same demand level as the pre-pandemic year of 2019, McKnight said.

“We’ve now got crude hitting $85 a barrel,” McKnight said. “I wouldn’t be surprised to see it hitting $100 a barrel within the next five weeks. Then we’re getting into the summer driving season. The prelude to that is when the refineries go into semi-annual maintenance – right about now as a matter of fact.”

Added to that is what he considers the key thing to watch – the demand for and cost of jet fuel.

“When jet fuel demand starts to skyrocket, that means people have a job, they’ve been to work and now they’re going to go on holiday,” he said.

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The more crude used for jet fuel, the less that’s available for other distillates, like gas and diesel.

There’s also the inflationary influence of the price of diesel. It’s now 10 cents a litre higher than gasoline, reversing the traditional picture.

“Diesel, like it or not, is what gets the food to the table,” McKnight said. “The last link in the chain of supply is the good old diesel truck getting it to the store.”

And, what looks like the coming end of the COVID pandemic is not going to help the situation.

“The pandemic is starting to slow down,” McKnight said. “People are getting frustrated and getting back on the road. They’re starting to ignore any of the warnings going on and that’s just going to get worse. Everything is out of whack.”

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