VANCOUVER (NEWS 1130) – It already costs an arm and a leg to fuel up on the Lower Mainland, but we could soon be paying even more if Alberta imposes fuel cuts as it has threatened.
Premier Rachel Notley’s NDP government has given notice of Bill 12, called Preserving Canada’s Economic Prosperity Act. That would give the province the power to restrict fuel shipments to the Lower Mainland.
But what would that actually mean for you fuelling up at the pump? There are a lot of unknowns at this point but we asked a fuel market analyst to give us his best guess.
“If legislation passed and all supplies of gasoline through the existing Trans Mountain pipeline were cut off, then that would have an impact on wholesale gasoline prices or wholesale diesel prices for that matter, such that, I’m certain that the wholesale price would rise, and along with that, retail prices would rise as well,” explains Michael Ervin, a fuel market analyst and senior vice president at Kent Group. “It’s very difficult to predict. The terminal operators that distribute fuel on the BC side would certainly be scrambling to find alternative sources of supply.
“The problem, right across North America — refineries are already operating close to 100 per cent, and what they do produce is pretty committed to contract clients already. So, that’s why we’d see wholesale prices go up. Like any commodity in short supply, that commodity’s price would rise. The amount? Probably in the order of five to 10 cents per litre more than what we see right now, and that would be at both wholesale as well as at the retail price level.”
However, Ervin points out another interesting sidebar to this story. He says cutting off fuel shipments would also hurt Alberta refineries.
“If that legislation were enacted and the Alberta government was successful in curtailing supply of gasoline from Edmonton to Burnaby, it’s good to remember that there’s an impact on the Alberta side,” says Ervin. “The three refineries that produce that gasoline and diesel fuel, having now had their market cut off, they would have a surplus of gasoline and diesel that they have to find markets for, and probably at a depressed wholesale price. It’s the other side of the coin as to what would happen on the Alberta side.”
Any of this would add more pain at the pump for Lower Mainland drivers who pay the highest gas taxes in the country.
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