National Post (National Edition)
PAIN AT PUMPS IN B.C.
A NEW PIPELINE MAY NOT HELP
The gas price disparity between Alberta and B.C. is always pretty surprising, but in the last few weeks it has become utterly, stratospherically, disproportionately high.
Last Thursday, Edmontonians were paying 84.9 cents a litre, while drivers in the neighbouring capital city of Victoria were paying 137.9 cents. That’s a spread of 53 cents. According to Dan McTeague, a senior petroleum analyst at Gasbuddy.com, it’s an “unprecedented” price disparity for two major Canadian cities.
If an enterprising Edmontonian filled up a 63,500-litre B-train with retail-priced gasoline, they could bank gross earnings of more than $30,000 simply by driving it to the coast. Drive the 12 hours from Edmonton to Vancouver with a 378-litre slip tank in the back of your pickup truck, and the value of the gas inside will magically jump by $148.
Below, a few reasons as to why this is happening (and why it isn’t necessarily because B.C. refuses to build oil pipelines).
FOR STARTERS, TAXES ARE WAY HIGHER IN B.C.
Taxes are always the most important factor when discussing Canadian gas prices. It’s the singular reason why U.S. gas prices seem so absurdly cheap to Canadians. Edmontonians pay a 10-cent-per-litre federal excise tax, 5 per cent GST and a 6.73-cent-per-litre carbon tax. In Vancouver, drivers pay a 7.78-cent-per-litre carbon tax, 17 cents per litre on a public transit tax, 8.5 cents of additional provincial taxes and also the GST and 10-centper-litre federal tax. Roll it all together, and when a Vancouverite fills up the 43-litre tank of their Prius, they’re paying more than $20 in provincial, federal and municipal taxes. That same fill-up in Edmonton, meanwhile, could incur less than $10 in taxes.
COASTAL B.C. HAS A CONSISTENT PROBLEM WITH SHIPPING IN ENOUGH FUEL
Strip away all the taxes, however, and there is still a major difference between the wholesale price for gasoline in B.C. and Alberta. According to the latest pricing from Petro Canada, a no-tax, no-markup litre of gas costs 56.3 cents in Edmonton, 69.2 cents in Vancouver and (the highest in Canada) 70.8 cents in Nanaimo. This is mainly because, these days, it’s extraordinarily hard to keep coastal B.C. supplied with enough gasoline. In pre-expo 86 Vancouver, the region had 1.26 million people and four oil refineries. Now, after a series of closures in the 1990s, Metro Vancouver has 2.5 million people and one oil refinery; the relatively small Burnaby Refinery pumping out 50,000 barrels of fuel per day. (New Brunswick’s Irving Oil refinery, for comparison, produces 320,000 barrels per day.) The Burnaby Refinery isn’t nearly sufficient for the ever-rising fuel needs of Vancouver Island and the Lower Mainland, so the rest of the gas and diesel comes from two places: through the Trans Mountain pipeline from Edmonton or by sea from abroad. And, since the pipeline is full, the only thing stopping the West Coast from having fuel lineups is by keeping their gas prices high enough to lure enough tankers and gas barges from abroad. These are mostly getting sent from just over the border in Washington State, although Mcteague says many British Columbians have likely burned a tank or two of gas from Asia.
B.C. GAS STATIONS ARE TAKING A HIGHER CUT
The final factor driving up B.C. gas prices is that, right now, a Vancouver or Nanaimo gas station is making more money off their customers than a gas station in Edmonton. Part of the reason is that Edmonton simply has a lot of gasoline around. However, retail markup is never a particularly major factor in the price of gas. By filling up that aforementioned Prius, the typical Canadian gas station only makes $5. So, the B.C. gas jockey is only charging a few extra cents than their Alberta equivalent, but it all adds up.
A NEW PIPELINE MAY NOT MAKE THIS ANY BETTER
In the 2016 National Energy Board document that approved the Trans Mountain pipeline expansion, there was a hint that once the project is completed, Trans Mountain would be able to start sending oceans of extra gas and diesel to the West Coast. Right now, the existing Trans Mountain pipeline ships mostly diluted bitumen while also supplying up to one third of the Lower Mainland’s refined fuel needs. The Trans Mountain Expansion would exist almost exclusively to ship diluted bitumen for export while the existing Trans Mountain pipeline would become “Line 1,” a pipeline devoted to shipping “light crude oil,” a category that includes gasoline and diesel. This could mean that Line 1 would suddenly be able to satisfy all of Coastal B.C.’S fuel needs. Or, Trans Mountain might simply fill Line 1 with a bunch of upgraded light crudes, which won’t do anything to help get more gasoline into B.C. The short answer is that extra pipeline capacity from Alberta could indeed lower B.C. gas prices, and is actually the most efficient way to do so. However, there’s no guarantee this will happen. “I think it’s unlikely to do much (to retail prices) at all,” Andrew Leach, an energy economist with the University of Alberta, told the National Post.