Expert prediction grim as gas prices hit $2 in Kamloops, Okanagan

The writing has been on the wall for weeks that this was coming. Gas prices have hit a daunting price in Kamloops and the Okanagan.

Gas stations are selling regular fuel for $1.99.9 in Kelowna, Vernon, Penticton and Kamloops. The cheapest prices are only a few cents less.

University of British Columbia’s professor of supply chain economics Werner Antweiler said these prices are likely to go higher as the U.S. and Israel continue to wage war on Iran, blocking 20 per cent of the world’s oil from passing through the Strait of Hormuz.

“That means that prices will need to rise much further than they are today to balance supply and demand,” he said.

Antweiler said up until now oil and gas stockpiles have been filling the supply gap, but if the war continues there will be a physical gas shortage.

Drivers at the pump aren’t the only ones being affected. Airlines around the country are suspending some routes because of jet fuel shortages, but so far no routes in B.C. have been specifically suspended.

WestJet is consolidating flights and adding a $50 surcharge to tickets because of fuel costs.

Antweiler said that domestic flights in and out of the B.C. Interior aren’t likely to be cancelled or suspended due to jet fuel shortages, but plane tickets across the board are going to get more expensive.

“Here in North America, we are balanced in our output. So we have our own supply that satisfies our own local needs. But we’re still at the mercy of the international prices because the oil companies, given the opportunity to sell their product abroad, will of course want to take advantage of it,” he said.

The federal gas tax cut has lowered prices by around $0.10 a litre for the summer, but Antweiler said there is little the government can actually do to push prices down by cutting taxes.

“Even not taxing at all would actually still not be enough, because we’re looking at very, very significant price increases,” he said. “It’s also the wrong intervention, because if there is a worldwide shortage, we need to conserve fuel… You’re kind of pushing against the forces of the market. That’s not going to work.”

Oil prices are still fluctuating around $100 USD per barrel with Brent Crude sitting at $114 USD.

Antweiler said that if oil prices continue to rise up to $150 USD a barrel, things like food, plastic and really anything that needs to be transported is going to get significantly more expensive.

“We’ll just see how things will play out over the next few weeks,” he said.

“My prediction is we’ll be in for a summer of very high prices that will continue throughout the summer and even longer.”