© Scott Olson/Getty ImagesThe Joliet refinery in 2005.
All of a sudden, Canadian gas prices are reaching heights not seen since the release of Sharknado. Even in a cheap fuel haven like Alberta, prices are peaking as high as $1.26 per litre in Edmonton and $1.28 in Calgary. In B.C., the average price is an incredible $1.38 per litre, breaking $1.40 in Vancouver.
So, the National Post called up Dan McTeague with GasBuddy.com and a semi-obsessive expert on all things petroleum. Below, the surprisingly complex backstory to why your Honda just got way more expensive to run.
Blame it all on a production slowdown in the U.S.
Despite our oceans of oil in Alberta and Newfoundland and Labrador, Canada still gets much of its gasoline from U.S. refineries. ExxonMobil just slowed operations at its Joliet, Ill., refinery to carry out some seasonal maintenance. Same deal at a BP refinery in Whiting, Ind. Then a Texas-to-Oklahoma fuel pipeline sprung a leak, necessitating a temporary shutdown. All of these events barely merited a mention in the news, but they're collectively costing consumers millions in pricier gas. Much of the Canadian gasoline market is subject to the Chicago wholesale price for gasoline. At the beginning of October, it was $0.56 CDN per litre. Now, it's shot up to $0.65 CDN. And, of course, the end cost is significantly higher for Canadian drivers once taxes, transport costs and profit are all tacked on.
Comment: In short, the US sets prices by determining supply, for now at least.
The Americans have been particularly thirsty for gasoline lately
A leaky pipeline and some routine maintenance are "relatively mundane factors," as GasBuddy noted in a blog, but they've been helping to spike prices for the simple reason that Americans suddenly need a lot more gas. U.S. consumers are demanding 257,000 more barrels of gasoline, per day, than this time last year. The country's economic growth is at three per cent and unemployment is continuing the plunge it began in 2010. It all makes for more cars and trucks on the road, and greater stress on the U.S. fuel supply. This time last year, the U.S. Midwest had 49.5 million barrels of gasoline on hand. Now, it's down to 45.5 million barrels. "This is the lowest we've been in a very, very, very long time," said McTeague. The result is that the U.S. is similarly getting hammered by higher gas prices, although not nearly as badly as in Canada. Right now, California is home to the highest gas prices in the United States. Still, if Leonardo DiCaprio knows where to look, he can fuel up his Range Rover for the equivalent of 91 cents CDN per litre.
Comment: The US economic recovery is substantially a myth - after all, that's why Trump got elected; he promised to make it real. What's actually happening to the US fuel supply is that the US govt is eating into its supplies in order to maintain its control of global flows by attempting to outsell the Russians and the Saudis on the international market. The US reserve was ostensibly started in 1975 because oil supplies were interrupted during the 1973 - 1974 embargo by Saudi Arabia and other OPEC countries, so the US wished to mitigate future temporary supply disruptions. What actually happened is that Kissinger and the '7 Sisters' Western oil firms brought about that oil crisis to create the US 'petrodollar', a system whereby oil flows could be controlled with the dollar as the sole currency with which it could be traded in. Now that the Russians, Saudis, Chinese and others are 'counter-conspiring' to trade oil (and gas) in their own currencies, US control of the world's energy flows is taking a serious hit and the artificial market conditions the petrodollar generates (like cheap consumer products saturating the US and Canada while everyone else pays 'top dollar') is coming to an end.
Canadian dollars can't buy as much gas
One month ago, a Canadian dollar bought as much as 80 cents of a U.S. dollar. By the beginning of November, that was down to as low as 77 cents. Naturally, a devalued currency means it costs Canada just a bit extra to bring all of its gas and diesel over the border. Although, according to McTeague, the absolute maximum effect this would have at the pump would be to raise prices by four cents; a fraction of the 16 cents on average that Canadian prices have risen since early October.
Unfortunately, things probably won't be getting any better
U.S. production will eventually catch up. That ruptured pipeline mentioned earlier is already fixed, and major refineries will soon wrap up their seasonal maintenance. However, this is all happening just in time for consumers to get hammered with the effects of higher global prices on crude oil. Demand everywhere is on the upswing, and it doesn't help that Saudi Arabia is currently threatening war with both Lebanon and Yemen. On Halloween night, a barrel of West Texas Intermediate crude went for $54 USD ($69.02 CDN). As of press time it's at $57.24 USD ($73.16 CDN).
Canada has refineries but they are U.S. (or off shore) owned and operated. We would have a few more, and some pipelines to get the product to market except for the people who believe that a few more Lac Megantic's [Link] are worth it to avoid running pipe.