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'Empty threat': Economists slam United Conservative leader's promise to cut off gas to B.C.

Last Updated Apr 16, 2019 at 5:35 am PDT

Prices listed at a Metro Vancouver gas station in April of 2019. (Dean Recksiedler, NEWS 1130 Photo)

VANCOUVER (NEWS 1130) – As concerns about the impact of Alberta’s provincial election on Metro Vancouver gas prices are raised, some economists say Jason Kenney’s threat to “turn off the taps” to B.C. are just not viable.

With the United Conservative Party leading in the latest polls, one gas analyst has said we’ll want to keep an eye on the result of Tuesday’s provincial election, with the possibility of an up to 30 cent increase per litre if Alberta were to cut supply under his promise.

However, in the view of independent economist Robyn Allan, this is all hot air. She says Alberta’s refiners rely on shipping to B.C. for about 20 per cent of their revenue streams.

“So it’s very unlikely that they will shoot themselves in the foot. And when you listen to what Mr. Kenney says, there is no indication here whatsoever of what the business realities are,” she tells NEWS 1130.

Allan says some of the businesses operating in Alberta — like Imperial Oil and Suncor — rely to a large extent on the B.C. market for their refined petroleum product deliveries, which include gasoline, diesel and jet fuel.

“B.C. is a very important market for those products, and the revenue stream is significant,” Allan notes. “So if the taps were cut off, those markets would be cut off to those refiners and it would fundamentally affect their bottom line, and that would affect their stock prices.”

She believes it’s important for everyone to slow down and not jump to conclusions, adding “Alberta needs B.C. as much, or if not more, than B.C. needs Alberta.”

Despite the negative consequences she’s illustrated to companies should Kenney follow through on his promise, Allan points out that B.C. has at least 20 days of gasoline supply stored in-province.

The Parkland refinery, for one, has significant access. Allan says refineries can also transport oil by rail through the U.S.

“The whole idea that somehow these taps could be turned off and we’d have an immediate impact is ridiculous,” she says. “If Suncor and Imperial want to price-gouge and take advantage of a situation — if Kenney could even legally do it — then they’re going to have to recognize that there’s going to be some push back from B.C. consumers.”

The leader of the United Conservatives is just grandstanding, she believes. “It’s not fair to British Columbians and Albertans that want to cooperate and find that we do have good relationships. He’s adding fuel to a fire here that should not be even given any oxygen.”

On the viability of Kenney’s threat, economist Werner Antweiler with the Sauder School of Business echoes some of Allan’s points.

“It’s harming the businesses in Alberta because he would be, actually, impeding the oil exporters, the oil companies in Alberta from doing what they consider their legitimate business,” Antweiler explains, calling the potential move very “un-business-like”.

Cutting supply to B.C. would be done through a bill which Antweiler notes has not even been proclaimed yet.

“Jason Kenney has said he would actually go and proclaim it and then, in fact, apply it, or as far as the application’s concerned, it would actually only create the option. So whether or not it would be used is still a very big question.”

The potential damage, he says, would be quite limited. “They would not be turning off the tap to all the other export destinations, and, of course, British Columbia would be able to import oil from Washington state.”

He says the result of cutting supply could mean a slight price increase, but “not by a whole lot.”

Kenney’s comments are just one of many in the ongoing feud between Alberta and B.C. over the Trans Mountain pipeline expansion.

B.C. Premier John Horgan has repeatedly said he is defending the interests of British Columbians by fighting the expansion in court. Gas analyst Dan McTeague believes with GasBuddy.com has said “The B.C. government’s response to a potential court challenge also includes the possibility of civil chaos.”

He told NEWS 1130 “There’s no doubt that opposing the pipeline may be politically de rigueur for some people, but without that pipeline Vancouver is in a lot of trouble.”