B.C.'s 'boutique' gasoline contributes to higher prices, experts say
The B.C. government’s requirement for low carbon fuel is a key reason Metro Vancouver has the highest gasoline prices in the country, experts say.
GasBuddy.com petroleum analyst Dan McTeague estimates it costs refineries eight to 14 cents more a litre to produce the specific fuel.
"If you want someone to make your boutique gasoline, which only B.C.has, then you're going to pay," said McTeague.
The Greenhouse Gas Reduction Act came into force in 2009 and is designed to reduce the amount of carbon in the province’s transportation fuel.
But the unique gas, along with tax and summer demand, are not the only factors pushing up the price.
B.C’s two refineries don’t produce enough gasoline to meet the province’s demand. Even the fuel we get from Alberta isn’t enough, so we turn to the western United States.
Trouble is, their fuel costs more than the rest of the U.S. to begin with.
Consider the gasoline spot markets: The New York Harbor Cargo Cast Price is US$2.0378 a gallon. The Pacific Northwest Cash Price fell recently seven cents to US$2.319 a gallon, but is still significantly more expensive. That’s one of the reasons the price at the pump is much higher in California, Oregon and Washington State than it is in New York.
That means the gas Metro Vancouver imports is a lot more expensive than the fuel cities like Toronto bring in.
"Well we're very challenged in Western Canada and the west coast of the United States, partly because we're isolated by the Rocky Mountains," said Michael Ervin, senior vice-president of Kent Group Ltd.
Next, throw in the extra cost to make a low carbon blend.
"It's a little rich to be demanding of Washington State and Alberta refineries a quality of gasoline under the clean fuels mandate," said McTeague.
"If you can't provide it yourself, you have to expect there is going to be a premium."