, 17 tweets, 12 min read Read on Twitter
To address the spate of let's call it "interesting" analysis about gas prices in BC from @MarcLeeCCPA a quick thread about the refined fuel situation on the coast and #transmountain's effects on gas prices @keithbaldrey @robynallan #bcpoli #vanpoli @sjmuir @nbennett_biv 1/
As we all know BC uses about 192,000 barrels per day of refined fuel with Prkland providing about 33% of our gas and 30% of the jet fuel. The #Transmountain supplies most of the remaining refined fuel but it cannot supply everything we need #bcpoli #vanpoli
As a consequence we import about 30,000 bpd from the Americans. This number is from the Canadian Fuels Association and is corroborated by the US EIA. According to the EIA #bpoli #vanpoli 3/
The US sent about 45,000 bpd of refined fuel to us in Jan (last month of available stats) with most of that being jet fuel (~15,000 bpd), diesel and fuel oil (~16,000 bpd) and gasoline (~9,000 bpd) #bcpoli #vanpoli 4/
So @MarcLeeCCPA suggests we aren't importing 30,000 bpd of gasoline (which I admit some have mis-stated) but we still import around 10,000 bpd of gasoline. Now some would argue that is not a lot but that is not the point #bcpoli #vanpoli 5/
The point is that the shortfall is consistent and chronic. This leaves us in a quandary. Imagine you were losing 1 lb a week. It doesn't seem like much except if it continues indefinitely you run out of lbs to lose and you pass #bcpoli #vanpoli 6/
The only way to stop the loss is to buy from elsewhere...which means buying from the US. Since we have no control over that it means we are buying their bottoms, at a premium #bcpoli #vanpoli 7/
So what we need is not a massive increase in supply but enough to deal with the imbalance. Alberta, meanwhile has a glut of refined fuel thanks to their new refinery. business.financialpost.com/commodities/en… #bcpoli #vanpoli 8/
Given the over-subscription of the current #TransMountain there is not a lot we can do about filling in the gaps right now since the Puget Sound is after every drop of light crude Alberta can send and the marine heavy allotment still exists #bcpoli #vanpoli 9/
Under the current #TMX the expansion of Line 1 will address all the coast's needs. It will allow us to supply the Puget Sound with almost as much as can go down the Puget Pipeline while filling in the gaps in our refined fuel supply. #bcpoli #vanpoli 10/
In doing so it will address the shortage of refined fuels and thus reduce the scarcity premium we are paying. It will also help reduce the amount of light crude travelling to the Puget Sound via rail (at a risk to the Columbia Gorge) #bcpoli #vanpoli 11/
So to summarize, no we are not importing 30,000 bpd of gasoline but we are indeed reliant on expensive imported gasoline to keep us running. Without that expensive imported fuel we would run dry. #bcpoli #vanpoli 12/
The TMX will address that shortage while reducing risks to the coast. As for costs. The toll increase is expected to be about 2 c/L while the price differential between Vancouver and Edmonton is currently 23 c/L. #bcpoli #vanpoli 13/
That 23 c/L could be called "gouging" as long as you ignore Economics 101. Given the lack of capacity on the pipeline we only get fuel on it in exchange for not moving light crude or heavy crude. It has to be worth the shipper's space #bcpoli #vanpoli 14/
Eliminating the bottleneck takes away the leverage the shippers currently hold over the market and free up space so any supplier can send material down the pipe. Economic theory says adding competition reduces prices #bcpoli #vanpoli 15/
Some will argue that the refiners will try to maintain the difference but in an unrestrained market that is simply not possible. It is only possible because there is a small pipe and a lot of people bidding to move material down that limited pipe. #bcpoli #abpoli #vanpoli 16/
Once the bottleneck disappears the 23c/L goes away because the Albertan refineries with a glut won't be willing to sit on the sidelines letting their competitors make profits. Then we only have a 2c/L toll increase. A price we would happily pay to save 23c/L #bcpoli #vanpoli 17/
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