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B.C. gas stations are taking a higher cut

The final factor driving up B.C. gas prices is that, right now, a Vancouver or Nanaimo gas station is making more money off their customers than a gas station in Edmonton. “Let’s be honest, gas stations (in Edmonton) are beating themselves silly,” McTeague said. Part of the reason is that Edmonton simply has a lot of gasoline around. The city has three large refineries operating under capacity along with a direct connection to some of the continent’s cheapest oil. These are not the typical conditions under which a gas station will feel safe to increase their profit margins. However, retail markup is never a particularly major factor in the price of gas. By filling up that aforementioned Prius, the typical Canadian gas station only makes $5, and actually earns much of their revenue from cigarettes, energy drinks, firewood and the like. So, the B.C. gas jockey is only charging a few extra cents than their Alberta equivalent, but it all adds up. “You’ve got a difference in wholesale price because of the supply issue, you’ve got differences in the tax rates and then you’ve got differences in the retail margins; stack those things on top of one another and that gap can get quite big,” said Jason Parent, vice president of consulting at the Canadian petroleum analytics firm Kent Group.

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A new pipeline may not make this any better

In the 2016 National Energy Board document that approved the Trans Mountain pipeline expansion, there was a hint that once the project is completed, Trans Mountain would be able to start sending oceans of extra gas and diesel to the West Coast. Right now, the existing Trans Mountain pipeline ships mostly diluted bitumen while also supplying up to one third of the Lower Mainland’s refined fuel needs. The Trans Mountain Expansion would exist almost exclusively to ship diluted bitumen for export while the existing Trans Mountain pipeline would become “Line 1,” a pipeline devoted to shipping “light crude oil,” a category that includes gasoline and diesel. “Trans Mountain said that it does not intend to transport significant amounts of heavy crude oil on Line 1,” reads the National Energy Board report. This could mean that Line 1 would suddenly be able to satisfy all of Coastal B.C.’s fuel needs, significantly lowering their price gap. Or, Trans Mountain might simply fill Line 1 with a bunch of upgraded light crudes, which won’t do anything to help get more gasoline into Victoria and Vancouver. The short answer is that extra pipeline capacity from Alberta could indeed lower B.C. gas prices, and is actually the most efficient way to do so (certainly more efficient than the hare-brained B.C. scheme to build more refineries). However, there’s no guarantee this will happen. “I think it’s unlikely to do much (to retail prices) at all,” Andrew Leach, an energy economist with the University of Alberta, told the National Post.

• Twitter: TristinHopper | Email: thopper@nationalpost.com