The province’s biggest refinery in Burnaby, which accounts for a quarter of the province’s transportation fuel, underwent a maintenance overhaul and only just resumed operations on April 9th.
On top of this, about 35 per cent of Washington state’s refining capacity is offline, according to Bloomberg data. A weakening loonie makes U.S. imports even more expensive.
Wholesale prices in the Pacific Northwest region are also up 20 cents per gallon since April 9, according to GasBuddy’s McTeague.
“Vancouver has a serious supply problem even with all things back to normal,” says McTeague who predicts prices will surge even higher in the summer driving season.
The problems do not stop at just supply constraints as recent carbon and transportation taxes have also pushed further pain onto consumers who were already paying high fees. For example, Vancouver already had Canada’s fourth highest taxes on motor fuel even before new taxes were put in place.
It can get far worse
The NDP-Green coalition has made opposition to Kinder Morgan Inc.’s Trans Mountain pipeline expansion a hallmark of their government, placing them directly in conflict with both the Federal government and Alberta.
The province also imports roughly 60 per cent of its refined fuels from oil-rich Alberta. This reliance on Albertan fuel (which cannot be changed quickly) creates an area of opportunity for Alberta to push for their demand of expanding the Trans Mountain pipeline.
It’s not hard to figure out how much higher prices can go if the taps are actually turned off, nor is it hard to figure out just why both Albertan’s and the Federal government are willing to fight tooth and nail to make sure it’s built.
Namely, it allows Alberta to stop selling its oil at radically discounted prices to the United States while also allowing the Federal government to stop relying so much on American oil interests.
While Alberta and the Federal government have aligning interests here, there is a serious problem from the Green party and NDP coalition in BC.
The base for these two parties disproportionally leans against pipeline development, even if it benefits the national interests.
Wait, is it really in the national interest?
The $7.4 billion* pipeline Project will increase the value of Canadian oil by unlocking access to world markets.
A Conference Board of Canada report has determined the combined government revenue impact for construction and the first 20 years of expanded operations is $46.7 billion, including federal and provincial taxes that can be used for public services such as health care and education.
- British Columbia receives $5.7 billion
- Alberta receives $19.4 billion
- The rest of Canada shares $21.6 billion
- Municipal tax payments (not adjusted for inflation) total $922 million to BC and $124 million to Alberta over the first 20 years of expanded pipeline operations.
Difference in ideology
Because of the disparity between their base and average residents, the NDP government would likely lose most of their voters if they allow the project to move forward, even though many are chafing under these costs.
In effect, the $46 billion in benefits are outweighed by their interests because their government would be removed from power.
Due to this combination of economic, social, and political forces, which almost guarantee a long-term stalling of pipeline development, it is extremely likely that the prices of oil in British Columbia continue to skyrocket.
There is a ray of sunshine though, as most B.C residents are beginning to demand an end to the drama around pipeline development as they largely come to the conclusion that Trans Mountain may truly be in the national interest.
How long will this battle continue for?
Well, we will have to wait and see.