Gas price rumour mill in overdrive

Effects of U.S. pipeline hacking muted in Atlantic Canada

The gasoline price rumour mill has been working overtime this week.

Fears that the ransomware attack that shut down the Colonial Pipeline in the United States for most of the week would lead to gasoline shortages in Atlantic Canada had some people heading out to fill up before it was too late.

But energy experts are saying, despite long lines at gas stations in the southern U.S., the only reason for the run on fuel in the Atlantic provinces is a fear that there won't be enough gas to go around. People have been filling their vehicles and containers up and down the East Coast of North America, just in case.

Joel Doucette, vice-president at Wilson Fuel Co. in Halifax, said Wednesday that he expects there will be an increase in gasoline prices in Nova Scotia this week, mainly due to a rise in demand driving up prices in New York Harbor. But he isn't willing to predict how much the increase might be.

“We've obviously been keeping a close eye on the situation ... and it appears (officials) hope to have the pipeline restarted by the end of the week, but the market will reflect the potential increase

in the short-term price,” said Doucette.

The fact that prices didn't rise immediately, once the shutdown was discovered, may reflect a certain amount of “length in the system,” which is the result of a slackening of demand caused by the pandemic, he said.

‘EXPERT’ OPINIONS

Roger Mcknight, chief petroleum analyst with Oshawa, Ont.-based En-pro International Inc., said he's heard a few comments from “so-called experts” who said the shutdown of the Colonial Pipeline shouldn't affect Canadian prices at all because it's a U.S. problem.

“That's completely ridiculous. Prices in Canada are

made in the United States, no matter which way you look at it,” Mcknight said in a telephone interview.

“If wholesale prices jump in New York Harbor, they'll jump in the Maritimes, they'll jump ... in Ontario, they'll jump in Albany, New York, which drives Montreal prices. That's the way it goes.”

How long the Colonial Pipeline shutdown lasts would determine its effect on Canadian prices, he said. The last time that pipeline went down was during hurricane Katrina, but it was a physical problem that could be fixed, said Mcknight.

“This is an IT thing, which is a completely different planet as far as problems are concerned,” he said.

“The way it's going right now, I think they're trying to fix it or pay the bribe (to the hackers who caused the shutdown) depending on which way you want to go.”

HOT SPOTS

Gasoline prices should go up in the U.S. southeast — Georgia, the Carolinas, in that region — he said.

If the shutdown had started to have an effect on the 900,000 barrels a day of gasoline that goes through the New York Harbor supply point, then pump prices would start moving up in Eastern Canada, “especially the Maritimes because that's what your prices are based on,” said Mcknight.

George Murphy, Seal Cove, N.l.-based researcher with the Consumer Group for Fair Gas Prices, said on Wednesday that gasoline prices are still not moving up anything appreciable to account for the pipeline outage.

Spot prices were up two cents a U.S. gallon on Wednesday, he said.

“(It) may be overblown somewhat,” Murphy said in a text message, since the pipeline is due to be back full at capacity sometime Friday.

“It would have been more critical if they never knew when it was coming back.” he said.

Most problems at the moment have been created by panic buying, said Murphy, which caused some issues with empty gas stations in the U.S.

RYAN TAPLIN • THE CHRONICLE HERALD Vehicles pass by Wilson Fuel storage tanks on Barrington Street in Halifax on Wednesday, A fuel pipeline shutdown in the U.S. has local drivers nervous about the possibility of gasoline shortages.