The gas price disparity between Alberta and B.C. is always quite surprising, but in recent weeks it has become utterly, stratospheric, disproportionately high.
Last Thursday, the Edmontonians were paying 84.9 cents a liter, while drivers from the nearby capital Victoria were paying 137.9 cents. This is a spread of 53 cents and a Victoria price 63% higher than Edmonton. According to Dan McTeague, senior oil analyst at GasBuddy.com, it is an "unprecedented" price disparity for two major Canadian cities.
If an Edmontonian entrepreneur filled out a 63,500-liter B-Train with gasoline at retail price, they could make a gross profit of more than $ 30,000 simply by taking it to the coast. Drive the 12-hour Edmonton to Vancouver with a 378-gallon tank in the back of your pickup, and the value of the gas inside will magically go over $ 148.
Here are some reasons why this is happening (and why it's not necessarily because the BC refuses to build oil pipelines).
For starters, taxes are much higher in B.C.
Taxes are always the most important factor when discussing gas prices in Canada. It's the only reason why US gas prices seem so absurdly cheap to Canadians. Even in states considered high taxes, such as California, filling will almost always be cheaper than the cheaper corners of Canada such as Saskatchewan. Edmontonians pay a federal tax of 10 cents per liter, 5% GST, and a carbon tax of 6.73 cents per liter. In Vancouver, drivers pay a carbon tax of 7.78 cents per liter, 17 cents per liter on a public transportation tax, 8.5 cents of additional provincial taxes, and also the federal GST tax and 10 cents per liter . Throw it all together, and when a Vancouverite fills the 43-liter Prius tank, they're paying more than $ 20 in provincial, federal, and municipal taxes. That same fill in Edmonton, meanwhile, could incur less than $ 10 in taxes.
Coastal B.C. has a problem consistent with sufficient fuel transportation
Take out all taxes, however, and there is still a big difference between the wholesale price of gasoline in BC and Alberta. According to Petro Canada's latest prices, one liter of gas without taxes and no margin costs 56.3 cents in Edmonton, 69.2 cents in Vancouver and (the highest in Canada) 70.8 cents in Nanaimo. This is mainly because, nowadays, it is extraordinarily difficult to keep the B.C. coast stocked with enough gasoline. At pre-Expo 86 in Vancouver, the region had 1.26 million people and four oil refineries. Now, after a series of closures in the 1990s, Metro Vancouver has 2.5 million people and an oil refinery; the relatively small Burnaby Refinery pumping 50,000 barrels of fuel per day. (The New Brunswick Irving Oil refinery, by comparison, produces 320,000 barrels per day.) The Burnaby refinery is not enough for Vancouver Island's and Lower Mainland's growing fuel needs, so the remainder of the gas and diesel come in two places: via the Trans Mountain pipeline from Edmonton or by sea from abroad. And since the pipeline is full, the only thing that keeps the West Coast from having fuel lines is to keep its gas prices high enough to attract oil tankers and gas barges from overseas. These are mostly shipped from the Washington state border, although McTeague says that many British Columbians probably burned one or two gas tanks from Asia.
B.C. gas stations are taking a bigger cut
The last factor driving the price of gas is that at the moment a gas station in Vancouver or Nanaimo is making more money from its customers than a gas station in Edmonton. "Let's face it, gas stations (in Edmonton) are messing around," McTeague said. Part of the reason is that Edmonton simply has a lot of gas nearby. The city has three major refineries operating under capacity along with a direct connection with some of the continent's cheaper oil. These are not the typical conditions under which a gas station will feel safe to increase its profit margins. However, retail marking is never a particularly important factor in the price of gas. By filling out the Prius, the typical Canadian gas station earns only $ 5, and actually earns much of its revenue from cigarettes, energy drinks, firewood and the like. So the B.C. Gas-jockey is only charging a few extra cents than its Alberta equivalent, but it all adds up. "You have a difference in the wholesale price because of the supply problem, you have differences in tax rates and then you have differences in the retail margins, stack these things on top of each other and that gap can get very big" "said Jason Parent, vice president of consulting for Canadian oil analysis firm Kent Group.
A new pipeline may not make it better
In the 2016 National Energy Council document, which approved the expansion of the Trans Mountain pipeline, there was evidence that, once the project was completed, Trans Mountain could start sending extra gas and diesel oceans to the West Coast. At present, the current Trans Mountain pipeline carries mainly dilute bitumen, while delivering up to a third of Lower Mainland's refined fuel needs. Trans Mountain Expansion would exist almost exclusively to transport dilute bitumen for export, while the current Trans Mountain pipeline would become Line 1, a pipeline dedicated to transporting "light oil," a category that includes gasoline and diesel. "Trans Mountain has said it does not intend to carry significant quantities of heavy oil on Line 1," the National Energy Council report says. This could mean that Line 1 would suddenly be able to meet all of Coastal B.C's fuel needs, significantly lowering its price difference. Or, Trans Mountain can simply fill Line 1 with a bunch of up-to-date light crude, which will do nothing to help bring more gas to Victoria and Vancouver. The short answer is that Alberta's extra pipeline capacity could, in fact, lower BC's gas prices, and is actually the most efficient way to do so (certainly more efficient than BC's scheme to build more refineries) . However, there is no guarantee that this will happen. "I think it's unlikely to do much (at retail prices)," Andrew Leach, an energy economist at the University of Alberta, told the National Post.