The decline in refining capacity leads to an increase in the price of gasoline

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Lower refining capacity leads to higher gasoline prices

Prices at the pump have increased in Alberta and British Columbia.

The price of a barrel of oil fell by around 20% in September in Canada, which should translate into lower prices at the pump. However, this is not the case due to an imbalance in the market, particularly in Alberta and British Columbia.

This is how the price of a barrel of West Texas Intermediate (WTI) oil fell about 50 cents on Friday, but average pump prices rose 20 cents per liter in Edmonton and Calgary.

Although prices at the pump in Alberta are lower than in the rest of the country, a liter of gas went from less than $1.50 on Thursday to more than $1.60 on Friday in these two cities.


This cost is lower than in British Columbia, where the average price per regular liter is $2.39, the highest in North America, according to Natural Resources Canada.

Many factors affect prices, but the closure of the Phillips 66 refinery in Ferndale, Washington for maintenance is a key factor.

Its closure removes 65 000 barrels of oil from the market every day.

British Columbia and Vancouver import every barrel of gasoline and diesel from this region of the United States, says Vijay Muralidharan, an analyst of energy from R Cube Economic Consulting. When refining stops, the amount of gasoline also stops. ยป

He clarified that the gasoline market in North America is divided into five regions. As supply is limited and demand is high, these regions compete and prices rise.

You have to be competitive, says Muralidharan. Whoever pays the most wins the product.

Another refinery in Ohio is also closed due to a fire, sending prices up. It should not be operational before 2023.

Vijay Muralidharan recalls that several American states and certain provinces require suppliers to blend their gasoline with 5 to 15% ethanol, which contributes to drive up prices, as the availability of ethanol in the market has been reduced by 7% this week.

Drivers, he says, should see the prices of gasoline to stabilize after Thanksgiving weekend, but the market will remain vulnerable to oil refining issues.

Based on information from Pete Evans

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