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MoneyNo simple answers for high B.C. gas prices or impact of pipeline, NEB says

10:31  16 may  2019
10:31  16 may  2019 Source:   cbc.ca

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No simple answers for high B.C. gas prices or impact of pipeline, NEB says© Ben Nelms/CBC Bulk fuel truck lines up at the Burnaby Parkland Refinery in Burnaby, B.C.

There's no easy explanation for why B.C.'s gas prices are so much higher than the rest of Canada, or what will happen to them if the Trans Mountain pipeline expansion goes ahead, according to the National Energy Board's chief economist.

The NEB released a snapshot of the issue Wednesday, breaking down the elements that have driven up the price at the pumps in B.C.

"It's a combination of numerous factors," chief economist Jean-Denis Charlebois told CBC. "One factor is that we're approaching the summer driving season. This means demand is increasing."

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Another is the fact that B.C. depends on the Cherry Point Refinery in Washington State for much of its gas, and the exchange rate has recently been less than favourable.

According to the NEB's summary, the four major components that make up the price of gasoline include:

  • The cost of crude oil: averages 51 cents per litre in Vancouver, or 10 per cent below the Canadian average.
  • Refining costs: averages 52.1 cents per litre in Vancouver, or about double the national average. This includes all the expenses involved in bringing crude from a wellhead to a refinery, and then completing the refining process.
  • Marketing margin: averages 10.5 cents per litre, about 69 per cent higher than the rest of Canada. This includes all costs for getting the refined product to the consumer, including transportation, marketing and profit.
  • Taxes: averages 53.9 cents per litre in Vancouver, or 21 per cent more than the national average.

Charlebois said the NEB has not broken down the various pieces that make up each of these four components to see how they compare in B.C. That means, for example, that he has not analyzed how the average profit margins for gas stations differ across the country.

High gas prices in Calgary a sign of the times, analyst says

High gas prices in Calgary a sign of the times, analyst says As of Friday, gas prices were up to $1.27 per litre at some Calgary gas stations, but an said those prices are “somewhat normal,” and caused by increased seasonal demand. "We're into that period in the spring and then early summer where typically we see prices on the rise and that's what's happening. There is increased demand," Parent said. Prices are about on par with what they were a year ago, Parent said, and like last year, they will probably edge up moving into the summer.

As for one of the most contested questions in Western Canada, Charlebois said gas prices could go either way if the Trans Mountain pipeline expansion project is completed as planned.

"If the extension is approved and built … this will increase capacity and directionally will allow more gasoline to flow from Alberta to B.C., thereby increasing supply and putting downward pressure on prices," he said.

But at the same time, "it will provide Canadian producers greater access to international markets, thereby putting upward pressure on prices of crude oil. How those two forces will net out remains to be seen."

Read more

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