Gasoline prices from Kelowna, B.C., to Thunder Bay, Ont., have spiked in recent days, at the same time fuel shortages related to the Fort McMurray wildfire and refinery issues at Suncor Energy Inc. have hit Petro-Canada stations across Western Canada.
The retail arm of Canadian oil giant Suncor is facing significant fuel supply shortages at stations across Western Canada. As The Globe and Mail reported Wednesday, Suncor has said gasoline and diesel shortages at Petrocan stations are due to a sudden outage one week ago at one unit of the company's Edmonton refinery, as well a dearth of crude feedstock because of wildfire-related shutdowns in the oil sands region.
In the past two days, overall retail gasoline prices have increased across Western Canada. For instance, Gasbuddy.com said the average per-litre price in Calgary had jumped to $1.08 on Friday from about 98 cents at the end of the day Wednesday.
On Friday, Suncor spokeswoman Sneh Seetal said the company is working to complete repairs and bring the unit at the 142,000-barrel-a-day Edmonton refinery back into service as safely and quickly as possible. The refinery continues to operate at a reduced capacity.
She also said Suncor has now secured additional feedstock supply for the refinery to mitigate the impact of production cuts related to the wildfire. The company's oil sands operations that were shuttered due to the fire threat are now being restarted in a staged manner.
There's a reason why Suncor's problems are felt largely in Western Canada. The country's fuels markets are comprised of two separate supply "orbits" – Western Canada and Eastern Canada. Refineries in the West, supplied mainly by crude oil from Alberta and Saskatchewan, provide fuels to the four western provinces, Yukon, the Northwest Territories and the western-most part of Northern Ontario, according to the Canadian Fuels Association. Eastern Canada is more reliant on foreign crude imports, including from U.S. suppliers, as feedstock for its gasoline.
Michael Ervin, senior vice-president at consultancy Kent Group Ltd., said in examining those two orbits, there was a 2-cent price differential in the wholesale gasoline price between Sarnia, Ont., and Edmonton on Tuesday. On Friday, there was a 7-cent price differential.
When wholesale prices for gasoline go up, retail prices follow, said Mr. Ervin, whose firm specializes in refining and retail marketing.
"It really speaks to the fact that supply is becoming tight in Western Canada as a result, in particular, of the Suncor outage," he said, adding that Suncor's competitors have likely seen their fuel inventories drawn down more quickly than they had expected.
"In Western Canada, it's a little more problematic because that region is far more accustomed to energy leaving the province, as opposed to coming into the province."
Suncor's problems also come as the busy summer driving season begins to ramp up. Dan McTeague, an analyst at Gasbuddy.com, believes recent problems at refineries in Ohio and Michigan that typically process large volumes of oil sands crude are the main culprits in the price jump in Western Canada. But he said Suncor's issues have the potential to worsen the price situation in the days to come.
"I really wish Suncor would disclose very quickly what the problem is," he said.
Ms. Seetal said this week that the cause of the outage at the refinery unit is under investigation. She added Friday that retail gasoline prices are determined by overall market conditions.
(Editor's note: An original online version of this story stated that there was a 2-cent price differential in the wholesale gasoline price between Sarnia, Ont., and Edmonton on Wednesday. In fact, the 2-cent differential was on Tuesday.)
Anticipating Ottawa's decision
Natural Resources Minister Jim Carr says he anticipates the federal cabinet will make a decision on the proposed Pacific NorthWest LNG export terminal near Prince Rupert, B.C., by the end of September.
The $36-billion project by Malaysian state-owned Petronas is considered a linchpin of B.C. Premier Christy Clark's plan for a provincial liquefied natural gas industry, but has raised the ire of environmental opponents.
Mr. Carr, speaking to reporters from a clean energy technology conference in San Francisco, said the Liberal government's decision will "likely to be some time after" September 15.
The Trudeau government has promised a decision roughly 90 days after the project submits its final application to the Canadian Environmental Assessment Agency.
The Canadian Press