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The news story that just won’t go away…


There’s this one particular news story that just won’t go away, and it has a surprise ending — or is it just the beginning? I think, in the media world (a world within itself), this is called a teaser. An opening line that forces the reader to read on.

One aspect of our own less convoluted world of energy that I have commented on a few times is the investigation initiated by B.C. Premier John Horgan into the reasons why record high gasoline pump prices are only in his province — and, of course, in the Vancouver area where all the voters are.

You are all aware of my opinions, so I won’t repeat them here.

However, I was asked for my views on a national TV show recently. After pointing out the fact that refining margins in Vancouver were 43 cpl compared to 27 cpl in Toronto and 10 cpl in Halifax, I told them that in order to lower gas prices in Vancouver, they need more than one refinery in B.C. or more domestic supply of gasoline. The interviewer then said that just that day Prime Minister Justin Trudeau said that he supported adding more refining capacity in the province.

Whew! Presto, problem solved?

Well sort of.

Just a few minor details like, who would build it? It’s taken 10 years to gain approval to expand an existing 66-year-old pipeline, the Trans Mountain Pipeline (TMX), which in the end had to be bought by Trudeau’s very own — and our own – government! A new refinery would cost at least $8 billion, and what investor, or oil company in their right minds would fork out that amount of cash when reviewing the progress report on an existing pipeline, let alone a greenfield refinery in a province really run by the Green Party supported by domestic and foreign funded eco activists?

The current Burnaby refinery was purchased by Red Deer-based Parkland Industries after Chevron decided to not only rid itself of the facility, but all of its retail service stations, cardlocks, bulk stations and wholesale operations, too. Got to hand it to Chevron, they saw the writing on the wall, an imposing, intimidating financial roadblock.

Let’s assume a new refinery were approved for construction in Mr. Trudeau’s imaginary world. Well, first, to run it you will need feedstock in the form of crude oil. To do that you will need a pipeline. To do that you will need to find both a rabbit and a hat and both at the same time.

Continuing with the animal themed metaphors, it looks like the PM is putting the cart before the horse. Build the TMX expansion to double refined product supply to the Lower Mainland. This will lower pump prices and political temperatures.

No one is going to offer up cash for a new refinery that will take 10 years to supply a single drop of gasoline to the Vancouver market.

I say to myself — Aha!

If we own a half-built pipeline, why not build our very own refinery as well? I mean Mexico and Venezuela did it by nationalization didn’t they?

Ignore the fact that both countries now import gasoline and diesel from the U.S. because their own refineries are beyond repair because their owners — the government — failed to realize that they weren’t in the oil business! A lesson that politicians in our federal government should take note of, and govern themselves accordingly, or come October they won’t be governing anybody.

~The Grouch


Roger McKnight

Roger McKnight

Roger McKnight is the Chief Petroleum Analyst with En-Pro International Inc. Roger has over 25 years experience in the oil industry, and has held senior marketing management positions responsible for national and international accounts. He is the originator of the card lock concept of marketing on-road diesel that is now the predominant purchase method of diesel in Canada. Roger's knowledge of the oil industry in North America, and pricing structures has resulted in his expertise being sought as a commentator by local, national, and international media. Roger is a regular guest on radio and television programs, and he is quoted regularly in newspapers and magazines across Canada.
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1 Comment » for The news story that just won’t go away…
  1. Earl Richards says:

    To beat the Alberta/Big Oil gasoline price rip-off, us Vancouverites should have bought electric cars, five years ago.

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