TORONTO — Ontario is experiencing a fuel supply crunch and the province’s truckers want regulators to allow them to fill up with off-road diesel in order to keep freight moving.

The Ontario Trucking Association made the request in writing to federal environment minister John Baird last night as Imperial Oil began rationing diesel fuel in the wake of a fire that closed its Nanticoke, Ont. oil refinery.

All across Ontario yesterday, truckers witnessed double price increases hours after Imperial Oil, Canada’s largest refiner, cut gasoline and diesel supplies to about 400 fuel stations in the province.

A company spokesperson said gasoline supplies to service stations could be reduced by 50 percent until the end of this month, and diesel could be slashed by as much as 60 percent.

“Outages may be short lived and rotating but some locations will be out of product for longer periods,” the company stated.

Diesel prices are almost doubled overnight because of a
fuel crunch in Ontario. OTA wants off-road fuel as a reprieve.

To make matters worse, the company can’t easily import additional fuel from the U.S. because of the ongoing strike at CN Rail, which is not only hampering rail lines, but also diverting whatever available tanker capacity in trucking to clear the backlog of liquid bulk normaly transported by rail.

“Should the current situation persist or get worse, the impact on the Ontario economy could be enormous,” says OTA President David Bradley.

“It is OTA’s understanding that the current supply crisis in Ontario could be resolved if on a temporary basis oil companies were allowed to resume producing and selling diesel fuel with 500 ppm sulfur content to the trucking industry,” he continued.

Last fall, Canada and the U.S. mandated a new 15 ppm ultra low sulfur diesel (ULSD) standard (down from 500 ppm) for all on-highway diesel fuel. Diesel with sulfur content of 500 ppm and above is still used in off-road applications like rail and agricultural machinery.

This tactic advocated by OTA is similar to an exception U.S. officials made after Hurricane Katrina. At that time, colored fuel (typically off-road grade with greater than 500 ppm sulfur content) was temporarily allowed for use in highway applications.

“We may already be in crisis mode where trucking operations are beginning to find it difficult to obtain diesel to fuel their trucks,” says Bradley. “Were
that to happen, the impact on the economy would make the current service disruptions in the rail sector look like a tea party.”

Bradley noted that some ULSD still needs to be available for the handful of new, smog-free 2007 engines, which are operationally required to run on ULSD. However, since there are so few of them out on the road, fuel suppliers could still temporarily switch a bulk of their production to off-road diesel.

“Right now, all trucking companies can do is scramble to find fuel and pass along the increased costs to their customers,” says Bradley. “Shippers should expect a spike-up in their carrier’s fuel surcharges. If the truckers can’t get fuel or if they can’t pass on increased costs, they are out of business, and if they are out of business, Ontario’s economy stops. It is not
a good situation.”