Vancouver gasoline prices: A market that is desperately short of supply

Motorists have been hit hard by high gas prices, according to gasoline market analyst Dan McTeague of GasBuddy. Relief is in sight in the form of added pipeline capacity from the upcoming Trans Mountain pipeline expansion.

gasoline.jpgFuel is in desperately short supply for Metro Vancouver motorists thanks to increasing reliance on the United States, but expert Dan McTeague of GasBuddy says there is relief in sight in the form of the Trans Mountain pipeline expansion.

McTeague told Resource Works that the twinned pipeline will allow Alberta oil companies to accomplish two objectives at the same time: get their crude oil product to the coast so it can be shipped to energy-starved foreign markets, and allow for all kinds of different refined products to reach local customers like Vancouver drivers.

"What it would mean for consumers is the potential for lower prices, not higher prices," said McTeague.

"The existing pipeline could be freed up to send more oil, more petroleum products like diesel, like jet fuel and like gasoline down the existing conduit."

More supply = lower prices

He disputed opponents of the pipeline expansion project who have made the argument that prices will go up if there is more gasoline available to the marketplace. This flies in the face of the fundamental law of supply and demand.


"Someone's going to argue, 'No, they're 100 percent oil for both of them.' That's simply not the case. With prices as high as they are, the lucrative nature of Vancouver's market is such that no refiner in its right mind wouldn't try to get more gasoline from Edmonton down to Vancouver. And remember, you know, the refineries on Burrard Inlet. It's not just Parkland. Shell has a facility there. Imperial has a facility there, which were former refineries. As does Petro Canada, which is known as Suncor.

"They all want to get their gasoline through that pipeline down to their facilities to sell locally. Of course, they might sell it in other regions, send it over to Victoria or whatever the case may be."

McTeague calls Metro Vancouver "a market that is desperately short in supply". That is reflected in pump prices around $1.40 a litre as the region increasingly is relying on the US for much of its product.   

Pipeline is not just about gasoline prices

While McTeague had an understanding view of those who are opposing projects that could give drivers a break, he argues it is a venture that has much bigger consequences.

"I suspect that people are looking for any excuse to say no [to the pipeline expansion]. But this is a real opportunity for the country. It is an opportunity as much for BC and for Alberta is it is for Ontario and Quebec. This has far greater implications for the good benefit of the country.

“At the end of the day, the federal government's going to have to enforce the rule of law. As a former parliamentarian, I know that no one is above the law. A decision has been made.

"It was exhaustive. There are some 157 conditions or more that the carrier has to abide by. They are among the strictest in the world. Let's not be negative on ourselves and understand that what is being built here isn't just in the short and long-term interest of the country, there are being done in a way that brings forth best practices."

We can pay for transit improvements with higher taxes - or pipeline revenues 

How would you rather fund needed transit fix: Higher taxes, or abundant pipeline revenues?

McTeague also pointed out that twinning the pipeline has an impact on the amount of taxation governments have to impose, especially the British Columbia government, to fund transit.

"The pipeline itself is going to see over a 20-year period a potential of some $10 billion dollars in direct revenue to the government through royalties, as well as through consequential jobs and other economic benefits.

"Those things would pay for the kind of infrastructure that otherwise the government is imposing in terms of taxes. You're paying the highest taxes in North America, because you're not raising enough revenue. This would be one way of ensuring that you have an ongoing revenue stream. Don't take my word for it, the Conference Board of Canada said that."

Read more background on this topic from scientist Blair King.

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