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U.S. refinery fire may lift Metro Vancouver gas prices
Experts say an oil refinery fire just across the border in Washington State could put upward pressure on gasoline prices in the Lower Mainland, depending on how long production is curtailed.
The fire Friday at BP's Cherry Point refinery south of Blaine could halve overall production there for days if not months, according to U.S. reports.
Calgary-based industry analyst Michael Ervin said it appears much gasoline refining there can continue as the fire mainly affected the ability to upgrade heavier crude oil.
"There could be a price impact," he said, but rated that an unlikely scenario that would be triggered only by a longer or more extensive shutdown.
Cherry Point normally processes 225,000 barrels of crude oil per day.
It doesn't usually supply Metro Vancouver, which gets most of its gasoline from refineries in Alberta via Kinder Morgan's TransMountain pipeline and from Burnaby's Chevron refinery, which gets its feedstock via Kinder Morgan.
But Ervin said an extended disruption that drives prices up in the northwestern U.S. would have a ripple effect on pump prices here.
Kinder Morgan's pipeline also has a branch that goes into Washington State at Sumas, so gasoline that typically flows to the Lower Mainland could divert south if a serious shortage emerged in the northwestern U.S.
Kinder Morgan spokesperson Lexa Hobenshield said such decisions are up to the pipeline's customers and that so far, the Cherry Point fire has had "no implications" on its shipments.
As of Monday, gasoline prices in Metro Vancouver were already up nearly five cents a litre from a week earlier to an average of $1.34, according to the website VancouverGasPrices.com.
Website co-founder Jason Toews said the need to import more gas to the Washington area will have a spillover effect on Metro Vancouver unless full production resumes swiftly at Cherry Point.
"Due to its close proximity to Vancouver, it will have an impact on gas prices if there is any kind of outage whatsoever," Toews said. "I would expect gas prices to rise upwards of 10 or 15 cents per litre."
Higher gas prices in Washington would also affect B.C. drivers who nip across the line to fill up.
Retailers must jack prices when supplies of refined gas tighten to ensure they don't run out, Toews said, adding otherwise the fear of a shortage can spark panic buying and even worse, price distortions.
Ervin said the latest lift in Vancouver gas prices appears unrelated to Cherry Point.
He said the same jump is being felt across the country because of generally higher crude oil prices and tensions with Iran over its nuclear program.
Although gas prices normally shoot up in the spring as more drivers and vacationers take to the roads, Ervin doesn't expect the typical seasonal increase to be as severe as in past years.
He cautioned his outlook depends on crude oil prices not soaring as a result of some military confrontation in the Middle East.
"It's a real dartboard situation with the tensions in Iran."
|Vancouver Historical Gas Price Charts Provided by GasBuddy.com|