If Alberta restricts oil supply, expect big jump in gas prices, experts say
British Columbians will certainly have to pay more at the pump if Alberta acts on threats to restrict the flow of gasoline and oil through the Trans Mountain pipeline, experts say.
It could mean an immediate increase of 20 to 50 cents for a litre for gas and fuel shortages within days. It would also require a massive overhaul of our fuel supply chains, meaning up to 300,000 barrels a day of oil and other fuels will have to find their way to the coast in rail cars, trucks, barges and tankers.
The infrastructure doesn’t exist to suddenly start unloading and storing large amounts of oil and gasoline from different kinds of vessels, said analyst Dan McTeague of Gas Buddy. “You can’t build a terminal overnight.”
Wholesale gas prices in Vancouver are already the highest in North America and “supply is as tight as a drum,” said McTeague.
“There isn’t enough to go around and if we needed more, it would take a long time to get here.”
Fuel could be shipped from the U.S. west coast, and from as far away as the U.S. Gulf coast through the Panama Canal, said industry consultant Michael Ervin of Kent Group.
“If pipeline and rail were pinched, it would be a scramble to find supply given that refinery production in North America is pretty much at 100 per cent already,” he said.
“On the West Coast, they simply don’t have the capacity to make more gasoline.”
Gas would be forced to take a long, circuitous route and cost 10 to 20 cents a litre more than we pay now, he said.
McTeague figures that’s an optimistic price estimate.
“I think we will start at $2 a litre for gas and go from there,” he said. “It won’t be a small increase because there just isn’t anyone that can provide alternative supplies readily. I can’t imagine you would have more than a few days supply.”
Several former refinery sites in the Port of Vancouver have storage capacity for a variety of fuels, which arrive mainly by pipeline, rail and truck.
There are also 13 storage tanks with a capacity of about 1.685 million barrels in total at Trans Mountain’s Burnaby terminal.
That oil and gas could provide a grace period while new sources of fuel are sought.
Closure of Trans Mountain would cut off supplies of crude oil to the Parkland refinery in Burnaby and put a dent in supplies to some Washington state refineries as well.
A lack of refining capacity makes B.C. particularly vulnerable. Three refineries in Metro Vancouver shut down during the 1990s.
And since the Royalite Refinery shut down in 1983, Kamloops, Penticton and Kelowna, are “100 per cent dependent” on gasoline from Trans Mountain, according McTeague.
Burnaby’s Parkland refinery produces 30 per cent of the Lower Mainland’s gasoline, the company said.
About 50 per cent of the region’s gas comes through Trans Mountain, McTeague said.
The remaining 20 per cent arrives by rail, road and water from refineries in other parts of Canada and Washington state.
Though virtually all its crude oil comes through Trans Mountain, Parkland is able to take delivery of crude oil by “vessel, rail and truck,” according to its annual report.
Vancouver International Airport receives most of its jet fuel from a small tributary of the Trans Mountain pipeline, but only one third of that fuel is produced in B.C. In addition, up to 45 tanker trucks arrive each day carrying fuel from Washington’s Cherry Point refinery in times of high demand.
The airport is in the process of building a $150-million fuel terminal and 15-km pipeline that will allow YVR to source fuel from Asia.