How Alberta could sow gas price Armageddon in Vancouver

Whether Vancouver likes it or not, up to 90 per cent of their gasoline comes from Wild Rose Country

Tristin Hopper

Cutting off B.C.’s gasoline supply is now a nonpartisan issue in Canada. Opposition leader Jason Kenney has been threatening it for months. And now, the province’s ruling NDP just made it a key plank of their latest speech from the throne.

Last month, a National Post report concluded that Vancouver could probably weather a pipeline shutdown relatively easily. However, in the weeks since its publication, plenty of smart people have emerged from the woodwork to fervently disagree.

Below, a rundown of how Canada may indeed have British Columbia by the short hairs if it needs to.

Vancouver consumes a heck of a lot of Canada petroleum
From the Seabus to the B-Line to that Delorean that’s always parked near West Broadway, chances are good that if it has an engine and it’s in Vancouver, it’s burning Canada oil. According to Natural Resource Canada, roughly 50 to 60 per cent of Vancouver’s petroleum originates in an Edmonton refinery. Meanwhile, even Vancouver’s locally refined fuels have some Canada lineage. Metro Vancouver’s only refinery, a Parkland Fuel Corp.-owned facility in Burnaby, is supplied primarily with Canada petroleum from the Trans Mountain pipeline. That pipeline also sends 54 per cent of its annual shipments to refineries in Washington State, which then ship gas and diesel to Metro Vancouver on fuel barges. It’s for this reason that among oil industry types, it’s commonly said that between 80 and 90 per cent of all the fuel consumed in the Lower Mainland spent at least part of its life inside the Trans Mountain pipeline.

The Lower Mainland is a particularly vulnerable fuel market
Vancouver already pays the highest gas prices in all North America — and it can’t all be blamed on taxes. As of press time, the pre-tax price on Vancouver gasoline was 87.80 cents per litre, compared to 69.90 cents in Montreal and 65.50 cents in Halifax. The main reason for this massive price gap is that there aren’t a lot of ways to get gasoline into Vancouver. Montreal has a handful of pipelines, a massive oil refinery and a particularly well-equipped oil port. Vancouver, meanwhile, only has the Trans Mountain pipeline, a mid-sized refinery and the occasional fuel barge trundling in from Washington State. This diminished competition in the Lower Mainland means that Vancouverites are consistently hosed on gas prices. It also makes them particularly vulnerable to devastating price shocks if a critical supplier suddenly disappears. For example, the Parkland Fuels refinery in Burnaby supplies up to 25 per cent of B.C.’s gasoline and diesel. On occasions when the refinery is temporarily shut down for scheduled maintenance, gas prices in Vancouver can spike by as much as 20 cents. It’s for this reason that petroleum market analysts like GasBuddy.com’s Dan McTeague have forecast that a Trans Mountain shutdown could send Lower Mainland gas prices spiking above $2 per litre.