Spike in gas prices not result of Kinder Morgan pipeline dispute: Horgan

VANCOUVER (NEWS 1130) – As drivers deal with even more pain at the pump, BC’s premier is suggesting the rise in gas prices has nothing to do with the ongoing pipeline dispute.

“It’s a result of a lack of supply,” says Premier John Horgan. “And that didn’t just happen in July, when a new government was elected. That has been building over the past number of decades.”

Looking at supply as the issue, Horgan says he reached out to his counterpart just south of the border.

“I spoke with Governor [Jay] Inslee last week. They have a refining capacity in the United States, and we were looking at ways to get more refined product into the market to curb the lack of supply or to increase the amount of supply so that demand will ease.”

The solution, he suggests, to address the diluted bitumen issue is to refine more oil here in BC.

“We refine about three and a half per cent of the product that we need in British Columbia. That’s a problem going forward, and I believe that we all have to put our minds to that,” he says. “More export of raw product will not help us at all.”
Horgan’s comments come just days after Saskatchewan introduced legislation that would allow it to control oil and gas exports from that province.

“I spoke with Premier [Scott] Moe yesterday about a range of issues, and he did make reference to their reference case. I found it interesting that we are at odds on one issue but ad idem on another, and so we’ll see how that unfolds.”
Saskatchewan’s new legislation is similar to a bill already tabled by the Alberta government.

Fewer outlets to blame for lack of deals in Vancouver: expert

Meantime, a new high around the Lower Mainland — the price of gasoline at $1.589 per litre — is getting drivers hotter under the collar.

There are still deals to be had, particularly in eastern Metro Vancouver and the Fraser Valley where there have been price swings of up to 16-cents per litre, but one industry analyst says you are unlikely to get a break at the pump in the rest of the region.

“You largely don’t see that kind of swing because there are fewer outlets in places like Vancouver,” says Roger McKnight, chief petroleum analyst at En-Pro International. “The population has increased, the independents or resellers in Vancouver have been driven out by high real estate costs, which elevates operating costs, and you are left with stations that are pretty much corporately run, mainly by Chevron, Esso, PetroCan and Shell.”

However, he says in the outlying areas, such as Abbotsford and Chilliwack, there are more independent companies which creates more price wars, generated by competition.

“When you have unbranded resellers or independents in the marketplace, they tend to fight each other rather vigorously to maintain market share.”

McKnight says competition is why there are more radical swings in gasoline prices outside the core of Metro Vancouver but not the widespread, aggressive price wars of yesteryear in other parts of the region. Those areas are also not subject to Metro Vancouver’s higher gas taxes.

Analyst Dan McTeague with GasBuddy.com agrees pricey real estate has put a damper on the region’s volatile gasoline market.

“Circumstances have also changed in that we don’t have a lot of direct refinery-owned gas stations who can use their refinery profits to offset their retail losses. We also don’t have a lot of new big box stores coming in and trying to gain a greater market share. It’s a very tough market,” he says, pointing out the Lower Mainland’s supply of gasoline is extremely tight. “That’s why we see prices move up and down in such a lockstep fashion.”

However, McTeague says there are still deals.

“Usually in the evenings, prices might drop by three or four cents per litre. And on weekends it’s not the exception, it’s the rule that stations drop by three or four cents per litre. So you’re getting a bit of a deal but not much as what we are seeing in what I consider the ‘wild west’ in areas further east.”

According to GasBuddy.com, the lowest price observed at the pump in Vancouver Wednesday morning was $1.499 per litre. In Abbotsford, the lowest price was $1.389 per litre.