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Spike in gas prices tied to squeeze in supply from U.S. refineries, rising oil prices

Greater Victoria saw the highest spike in the country, but that’s because the price was a relative "bargain" to begin with, says analyst.
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The price of gas spiked to almost $2.13 a litre in the capital region on Thursday, Sept. 28. Gas station in Colwood. DARREN STONE, TIMES COLONIST

Victorians woke up Thursday to find the price for a litre of gasoline had jumped 13 cents overnight — the highest spike in the country.

The price for a litre of regular gas, which had been $1.999 for about a month, is now $2.129 at most gas stations in the capital region.

Dan McTeague, a gas price analyst and president of Canadians for Affordable Energy, said the hike partially reflects the rise in the national benchmark price for a barrel of crude, which has risen from $80 US to $92 US since mid-August.

But it’s also the result of the shuttering of 20 per cent of the refineries in California this year, and the breakdown of two “fairly large” refineries in Los Angeles at the same time.

He said the west coast of Canada is “tied at the hip” to the gas market in the western U.S. states, notably California, Arizona and Washington, as the majority — if not all — of our gasoline products are sourced from that region.

While some gas comes to B.C. from Alberta via the TransCanada pipeline and some is produced on the Lower Mainland, the province does not produce enough gasoline to satisfy domestic consumption, making it a net importer of oil products, and at the mercy of U.S. suppliers.

McTeague said drivers here have actually been enjoying a bargain for the last month as retailers resisted passing on increased costs to consumers.

In Vancouver, where the price for regular-grade gas at the pump rose nine cents, the price had fluctuated throughout the month and was most recently about $2.05 a litre. The price for regular gas is still marginally higher in Vancouver, with the majority of stations posting between $2.139 and $2.149 Thursday afternoon.

“Despite the jump, Vancouver Island drivers still got off easy,” said McTeague.

He said that after converting to litres and factoring in the exchange rate, gas is actually more expensive in Los Angeles than Victoria right now.

“At $1.999, gas was a real bargain,” he said. “I don’t know why retailers kept it at that price for so long, but Vancouver Island retailers are known to march to the beat of a different drummer.”

While there were no reports of Americans driving to Canada to fill up their tanks, he said that the scenario has played out in the past.

He expects the higher prices to stick around for at least a week, with areas outside Greater Victoria possibly seeing a one to two cent drop by as early as the weekend.

People with diesel vehicles should brace for pain at the pump this winter, as stocks of diesel are running 13 per cent below regular levels at this time of the year, McTeague said.

He took aim at theories that gas prices rose because a long weekend is approaching.

“This is U.S. gas and that country does not recognize Truth and Reconciliation Day. Further to that, even our Thanksgivings are celebrated on different days,” he said.

McTeague said the price also has to do with rising demand. According to Statistics Canada, from July 2022 to July 2023, the country saw its largest annual population increase on record since 1957, with B.C. recording a three per cent growth rate.

“With an increase in demand, coupled with a squeeze on supply and people generally happy with not building any new [oil] refineries in this country, this increase was going to happen sooner or later.”

parrais@timescolonist.com

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