Forget Ike It's PetroCan's Fault

P.O. about the 13 cent rise in gasoline prices at the pump last Friday. Don't blame hurricane Ike, rather it was exasperated by the shut down of Petrocan here in Edmonton. The plant has been offline since July!

September 15, 2008

Petro-Canada Refinery Shutdown Causes Shortage Petro-Canada, Canada's second- largest refiner, said filling stations in Alberta and British Columbia may run out of fuel after the unexpected shutdown of a unit at its Edmonton, Alberta, refinery. The company is investigating the reason for the closing of the catalytic cracking unit, a gasoline-producing piece of equipment, according to a Bloomberg report. Petro-Canada spokesperson Jon Hamilton said the reduction in gasoline could last several weeks as the company fixes the unit. "It could be short term, it could be a little longer," Hamilton said. "We're looking at, I'd say, weeks not days, right now." Gasoline shortages may occur in parts of British Columbia's so-called interior region and Alberta, Petro-Canada said in a statement. The Calgary-based company said it's trying to boost supplies in Canada's western provinces partly by buying fuel from rivals. Deliveries to some customers and filling stations have been curbed, Hamilton said without providing details. "The deliveries that we're sending out are reduced from what they would normally get,'' he said. "That might mean a smaller load or that might mean less frequent loads." The company intends to import more supplies to its port terminal in Vancouver and truck the fuel to customers, Hamilton said. Petro-Canada also is altering its distribution network across the country to boost supply in western Canada. The equipment failure is unrelated to a C$2.2 billion ($2.07 billion) modification project nearing completion at the plant. Parts of the refinery were scheduled to be shuttered for about two months starting this month so that the plant can run on crude extracted from Alberta's oil sands. Output at the refinery was cut last month because of a water-boiler equipment problem. The plant is capable of processing 135,000 barrels a day. Imperial Oil Ltd. of Calgary is Canada's largest refiner and marketer.

Since Petrocan, Shell and Imperial Oil are the area's main refiners losing Petrocan put pressure on their retail outlets. Of course this should have been predicated. Add to that the shut down of East Coast gasoline due to Ike and you have the perfect storm.

In March, a shut down at Imperial's 187,000-barrel-a-day Strathcona refinery near Edmonton caused gasoline shortages at Esso stations throughout Alberta, Saskatchewan, B.C. and Manitoba.

Around the same time, Shell Canada Ltd. said its Scotford refinery and upgrader near Fort Saskatchewan, Alta., were operating at reduced rates because of unplanned maintenance.

Last year, Ontarians experienced gasoline shortages for several weeks after a fire at Imperial's Nanticoke refinery.

Canada's refining infrastructure is aging, but companies are not keen on investing in new facilities, said Roger McKnight, an energy analyst with Oshawa, Ont.-based consulting firm En-Pro.

Not only would it would take up to 10 years and billions of dollars to build a new refinery, but they would tilt the market against the companies' favour.

"Their refining margins would drop because of excess supply. So there's no incentive at all for them to do that," McKnight said.

Another factor discouraging the industry from spending money on new refineries is uncertainty about government regulations.

"If I was an oil company, I would like to know in 10 years, when I'm going to have this refinery built, what the eventual specs are going to be and what the emission standards are going to be," McKnight said.

As for the solution it is as clear as the nose on Uncle Ed's face, we need more refinery capacity in Alberta and Canada. Of course given the anti regulatory anti-public ownership attitude of Big Oil and its government in Alberta that ain't gonna happen any time soon.


And so we have gasoline shortages on refinery row.

Back in August, it was Petro-Canada. Now, it’s Shell that has run out of gasoline at some of its Alberta stations.

In Medicine Hat, the Shell stations on Dunmore Road and Eighth St. NW have been out of gas since Friday, while the Shell on South Railway had gas as of Monday but wasn’t sure how long its supplies would last. Shell stations on Redcliff Drive SW and Trans-Canada Way were reporting they still have gas.

Jana Masters, spokesperson for Shell Canada, said there are also a couple of stations in Calgary and Edmonton that are running on empty.

“But these are very small numbers compared to our total operations across the province,” she said.

While the Petro-Canada gas shortage in August had to do with a problem at that company’s refinery, Masters said that is not the case at Shell.

“It’s just a temporary challenge keeping up to customer demand,” Masters said.

It is the lack of tertiary refining that causes gasoline shortages in Canada and subsequently price increases. And wqe won't get more refineries built until there is a national initiative to make it so including a Green Plan.

Call it a Green National Energy Program. If you want to end price gouging lets have a made in Canada Energy Plan that includes increased bitumin processing and tertiary refining capacity.

Of course others have solutions too, like importing more dirty gas from the U.S. but that is all refined in Hurricane Alley, and we know what that means. 13 cent price increases in one day.

Petro-Canada said it’s pulling out all the stops to make sure supplies of gasoline keep flowing.

Company officials said on Petro-Canada’s website that it was able to use trucks to ship approximately 200,000 litres of gasoline per day from its Vancouver storage facility last week, but that volume has now more than quadrupled.

That’s been partially accomplished by hiring truckers from Ontario to move more product, Stevens said.

The company is also trying to find rail cars that could be pressed into service to deliver gasoline to destinations in B.C. and Alberta.

The company also is trying to boost its gasoline supplies by looking to its other Canadian refineries and to the United States and overseas, Stevens said.

An industry group that represents independent gasoline retailers is calling for a harmonization of gasoline standards between Canada and the U.S., which would allow for more importation of American products during shortages.

Canadian gasoline has hard caps on sulphur and benzene levels in gasoline, which prevents the importation of the product from the U.S. to ease any shortages, said Dave Collins, a director with the Canadian Independent Petroleum Marketers Association.

"It’s great if you’re a refinery because it blocks competition and helps you keep our prices up," he said in an interview from Halifax.

"But it’s not good for consumers and, at times like this, it’s not good for our operations either because we can’t get any gas," he said.

The federal government’s failure to ease importation restrictions means such shortages will likely happen again, Collins said.

Of course the solution is not unrestricted trade with the U.S. for dirty gas, rather the solution was in hand until the Liberals under Paul Martin sold off the last of Canadians taxpayers shareholdings in Petrocan.There is a solution to price gouging, that is worker and community control of the refineries.


SEE:

It's Time to Take Back Our Oil and Gas

NDP And Workers Control

Nationalize the Oil Industry

The Myth of the NEP

Aren't you sorry you sold your shares

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