Gas prices in Niagara jumped by as much as 16 cents a litre overnight Tuesday, fuelled by "gas bar shenanigans," says GasBuddy.com senior petroleum analyst Dan McTeague.

As fuel prices reached a high of 133.9 cents a litre Wednesday morning, McTeague said he expects prices to continue to climb in days and months to come.

Although most gas stations increased prices by about four cents overnight, McTeague said more dramatic increases were seen at stations that had typically been less expensive - such as gas stations on Ontario Street in St. Catharines that have been involved in a years-long price war.

In light of the increases, McTeague said the "hotdoggers" who had been selling gas at a discount might have realized "they can't play this game much longer without headquarters calling up and asking to confirm their sanity."

"Gasoline stations do themselves no favours when they decide to throw their operating margins in the garbage," he said. "It really is a distortion of reality, because all gas stations in theory pay within a penny or two for their wholesale price of gasoline . It's hard to sell gasoline at (117.9 cents a litre) when your wholesale price, taxes in, is 121 or 120."

McTeague said larger gas station chains often cut prices in an effort to drive out competition from smaller independent stations, relying on the sale of other goods to stem losses. Nevertheless, he said independent stations in the area have managed to hang on.

"You have a few left here in the Niagara region - Gales being the best example of the last defenders of the realm, if you will," he said.

But an extra 3.2 cents per litre in wholesale rates associated with buying more expensive summer fuel blends likely left discount gas station operators with "no choice but to throw the towel in and restore their margins."

While a four-cent increase is "bad enough," McTeague said price hikes related to restoring profit margins are "very frustrating for people."

The temporary closure of one of the stations involved in that price war may also have contributed to the price jump.

Parkland Fuel Corp. spokesman Leroy McKinnon said renovations are underway at the Pioneer station on Ontario Street to replace fuel tanks and lines. And soon after that station closed, prices at nearby gas stations increased to among the highest in the city.

McKinnon said the gas station is slated to reopen the week of May 12.

Meanwhile, McTeague said prices are likely to increase by another three cents in the next few days - on top of the nearly four cents they've climbed so far this week.

"That's almost seven cents in one week," he said. "Now you're getting a kick in the pants of almost seven cents per litre."

And as a result of increasing demand in the U.S., he said, prices for gasoline this summer could climb above $1.40 a litre.

"Right now at 133.9, Niagara region and St. Catharines are seeing prices they haven't seen since Sept. 28, 2014," McTeague said.

Allan.Benner@niagaradailies.com

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