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B.C.'s gas prices not expected to be impacted by ship stuck in Suez Canal

Last Updated Mar 28, 2021 at 12:03 pm PDT

FILE: Ever Given, a Panama-flagged cargo ship, that is wedged across the Suez Canal and blocking traffic in the vital waterway is seen Saturday, March 27, 2021. Tugboats and a specialized suction dredger worked to dislodge a giant container ship that has been stuck sideways in Egypt's Suez Canal for the past three days, blocking a crucial waterway for global shipping. (AP Photo/Mohamed Elshahed)
Summary

A big ship is blocking the Suez Canal, which is used to transport oil

But Werner Antweiler with the UBC Sauder School of Business believes it's unlikely to affect B.C. gas prices

He says we may see prices go up a bit, but that's because we're getting into the summer driving season

VANCOUVER (NEWS 1130) — Gas around Vancouver is about $1.45 a litre but there’s concern it could go up as some people worry about a costly blockage in Egypt.

Two additional tugboats sped Sunday to Egypt’s Suez Canal to aid efforts to free a skyscraper-sized container ship wedged for days across the crucial waterway, even as major shippers increasingly divert their boats out of fear the vessel may take even longer to free.

Although Werner Antweiler with the UBC Sauder School of Business believes what British Columbians pay at the pump won’t really change.

“The problem is very localized and supply of oil to the refineries all around the world is coming from many different destinations. And after all, it’s also possible to reroute the oil supply to go around the Cape of Good Hope in Africa — which of course takes more time and it’s more costly but ultimately, it will not impact gasoline prices or crude oil prices for that matter,” he explains.

Antweiler adds because crude oil is usually stored in sufficient quantities to keep the operations of refineries going it won’t lead to significant charges.

And because the oil demand is so low due to the pandemic Antweiler says it’s “putting a damper on any potential price increase the refineries.”

Antweiler adds British Columbians may see gas prices go up for other reasons like the summer driving season and the Carbon Tax in B.C., which increases next week.

The massive Ever Given, a Panama-flagged, Japanese-owned ship that carries cargo between Asia and Europe, got stuck Tuesday in a single-lane stretch of the canal. In the time since, authorities have been unable to remove the vessel and traffic through the canal – valued at over $9 billion a day – has been halted, further disrupting a global shipping network already strained by the coronavirus pandemic.

READ MORE: 2 tugboats speed to Egypt’s Suez Canal as shippers avoid it

A prolonged closure of the crucial waterway would cause delays in the global shipment chain. Some 19,000 vessels passed through the canal last year, according to official figures. About 10% of world trade flows through the canal. The closure could affect oil and gas shipments to Europe from the Middle East. Already, Syria has begun rationing the distribution of fuel in the war-torn country amid concerns of delays of shipments arriving amid the blockage.

Mediterranean Shipping Co., the world’s second-largest, said it already had rerouted at least 11 ships around Africa’s Cape of Good Hope to avoid the canal. It turned back two other ships and said it expected “some missed sailings as a result of this incident.”

“MSC expects this incident to have a very significant impact on the movement of containerized goods, disrupting supply chains beyond the existing challenges posed by the COVID-19 pandemic,” it said.