Gas prices stubbornly high despite oil’s deep dive

Blame U.S. refineries, low loonie for the persistent pain at the pumps in B.C.

Gas prices remain stubbornly high despite the latest slide in crude oil prices and infuriated Lower Mainland motorists are feeling gouged yet again.

Metro Vancouver gasoline is down only slightly from $1.40 a litre a year ago, while crude has plunged more than 50 per cent from around $98 a barrel to less than $44 as of Friday.

It’s as if the widely heralded era of cheap energy has bypassed B.C.

But petroleum industry analysts say it all boils down to supply and demand.

Crude oil accounts for less than half of the end cost of a litre of gasoline, with government taxes and refining charges the other big factors.

“I wish there was a simple explanation,” said Jason Parent of the Kent Marketing Group. “There isn’t much of a relationship on a day-to-day basis between crude oil and retail gasoline.”

Expecting gas to move in lockstep with crude oil is somewhat akin to expecting house prices to follow lumber prices, without recognizing scarce land or an influx of buyers might have an influence.

Parent said crude and gas prices can go in different directions for different reasons, and gas prices in B.C. can diverge from what other Canadians pay – which is what’s happening now.

Most of the difference between Metro Vancouver prices and the rest of the country is explained by the higher 17-cent-a-litre TransLink tax as well as B.C.’s carbon tax.

Motorists are paying just over $1 in Alberta, a few cents more in Saskatchewan and Manitoba, and $1.10 to $1.20 in most of Eastern Canada.

But even after taxes are factored out, Vancouver prices are 5 to 15 cents a litre higher than most other cities across Canada.

The reason, Parent said, is that Vancouver-area prices follow those along the U.S. west coast, where the wholesale gas supply has been constricted by refinery problems in California, driving prices up.

“Wholesale prices have been high there relative to the rest of the U.S. for a month now,” Parent said.

Some gasoline comes to B.C. through the Kinder Morgan pipeline, but the rest comes from Washington State or other U.S. refineries.

If prices were sharply higher in Vancouver than cities to the south, Parent said, gas would flow back to the U.S. – resulting in shortages here – or wouldn’t be shipped north in the first place.

Another “huge” factor behind why Canadians in general aren’t yet seeing much relief at the pumps is the drop in the loonie over the past year.

Crude and wholesale gas are priced in U.S. dollars, so Canadians are paying with a devalued currency that simply doesn’t go as far as it did a year ago.

So who is profiting from the persistently high pump prices?

“Right now, refiners are the big winners,” Parent said.

They’re running close to capacity, demand is up because of lower gas prices and therefore refiners can charge more than usual.

If crude oil prices get even cheaper – potentially as sanctions against Iran end and more oil pours onto the world market – there’s no guarantee gas prices will follow because of the refining constraints in North America.

Just Posted

Fraser Health to buy two private MRI clinics in Surrey, Abbotsford

New clinics will provide 2,000 more MRIs by fiscal year-end

Safe Surrey Coalition opposes removing any property from ALR

McCallum and Pettigrew take issue with a Port Kells proposal to exclude property from the Agricultural Land Reserve

Retired football kicker wanted play hockey as a kid, but ‘it just wasn’t in the budget’

Surrey-raised Paul McCallum now backs KidSport and its annual fundraiser set for Friday

City of White Rock celebrates water treatment plant progress

Plant to reduce manganese, arsenic in water

Surrey Eagles get first victory of season with 2-1 win over Vernon

Chase Stevenson ties game late, scores OT winner on Saturday

Live bear cam: Let the fishing begin

Watch bears in Alaska’s Katmai National Park catch their dinner live.

It’s shaping up to be quite a finish in CFL’s West Division standings

The Calgary Stampeders (10-2) are first, four points ahead of the Saskatchewan Roughriders (8-5).

Twice-convicted killer set to inherit multimillion-dollar company found guilty of father’s murder

A Toronto judge ruled that Dellen Millard is guilty of first-degree murder in death of his father,

Campaign seeks to add Farsi to B.C. school curriculum options

Group wants Farsi added to list of nine languages in policy covering second language requirements

Trudeau urges leaders to follow Nelson Mandela’s example at UN tribute

Peace summit in New York marks 100th birthday of former South African president

Senate seats filled in B.C., Saskatchewan

Canada’s newest senators are the first woman to lead the RCMP and a Cree Metis businessman

Newfoundland’s popular ‘merb’ys’ calendar is back

The calendar of burly, bearded mermen posing against scenic backdrops for charity returns

Less than half of Metro Vancouverites feel they can influence government: study

SFU researchers suggest most people believe elected officials don’t care

Cap rent increases at inflation rate, B.C. task force recommends

MLAs say drop annual increase that would allow 4.5% rise next year

Most Read