Right now, the price for gas in Edmonton is almost half that of Victoria

For the past week, Southern Vancouver Island has held the distinction of being home to the highest large market gas prices in Canada. Aside from remote corners of the Arctic, nobody is paying more for fuel than Greater Victoria. As of this writing, gas stations in Downtown Victoria were advertising 146.9 cents per litre, with the Co-op at Gorge Road and Hillside upping the ante to an incredible 165.9 cents.

Even in Vancouver, the traditional home of Canada's highest gas prices, gasoline is about $1.35. In Toronto, gas can be had for under a dollar a litre. In Edmonton, the cheapest litre of gas on sale is 83.9 cents; almost exactly half the aforementioned Co-op price of 165.9.

Back in November, we did the math on why it’s so much more expensive to run a Prius in Victoria than almost anywhere else. Our findings are reposted below.

Taxes and shipping bite hard

At an average of 45.35 cents per litre in 2019,Victoria’s gas taxes are the second highest in Canada, trailing only Vancouver. Of that, 5.5 cents goes to BC Transit, 13.5 to the provincial government as fuel tax, and another 8.89 cents in carbon tax for a total of 28.89 cents a litre. Ottawa then takes 10 cents as fuel tax, and charges GST. So far in 2019, GST has averaged 6.46 cents a litre based on local prices.

‍

The only higher price in a major Canadian market is in Metro Vancouver, where the local and provincial take is 35.89 cents a litre, seven cents more than Victoria’s. By contrast, oil-loving Alberta’s provincial gas tax is just 13 cents, with no carbon or transit tax. In Ontario, the province taxes gas at 14.7 cents with Ottawa charging an additional 4.42 cent carbon tax.

But even when taxes are set aside, Victoria is still paying a particularly high wholesale price for fuel. One of the main reasons for this are that there are no refineries around to make the stuff.There are none on the island and the only one on the Lower Mainland (the Parkland Burnaby Refinery) is relatively small, producing only enough to supply a quarter of the region’s fuel needs. As a result, Vancouver Islanders have to take whatever price they can get and then barge it across the Salish Sea. This barge ride alone means that, without factoring in taxes, Island gasoline is already 1.6 cents more expensive than in Vancouver.

BC requires a special kind of gas, which adds to the cost

There’s an awful lot of gasoline just across the water in Washington State. The Evergreen State has five major refineries just around Puget Sound, and it’s possible to stand on Dallas Road beach and see the steady line of Alaskan oil tankers enroute to supply them.

Naturally, it would be helpful to gas prices if the Island could top itself up with some of this plentiful, cheap American fuel. But it can’t: Just like a vegan at a barbeque, B.C. cars are required to fill up with a fuel that is chemically different than American gas.

Mandates for renewable fuel blends are common across North America, but B.C. has particularly strict requirements that aren’t shared by its neighbours. Across the water in Washington, the rules only require that ethanol makes up 2% of all gasoline sold in the state, and they aren’t picky about how it’s produced. In B.C., gasoline doesn’t just need to have more ethanol, but greener ethanol.

‍

B.C. fuel suppliers have to lower the overall carbon intensity of their pool of products relative to what they were in 2010; 10% lower by 2020, and 20% lower by 2030. Marketers have responded, blending in alternatives from lower-carbon sources in recent years. Those that don’t make the grade have to buy carbon credits from the ones that exceed it. It’s a complicated system, and one that isn’t found in Washington or Alberta.

The end result is that Vancouver Island can never just buy some extra gas that America had lying around. Every litre of fuel consumed on the Island has to be part of a special bespoke batch at the refinery. And like any bespoke anything, it’s more expensive.

“You can’t just pick up gas on one side of the border and sell it here if you’re an entrepreneurial type looking for arbitrage,” says University of Calgary researcher Kent Fellows.