Gas shortage a symptom of big Ontario problem, group says

An Ontario refinery fire has left gas stations with dry tanks and high prices because the province depends too heavily on imported fuel, an independent retail group says.

An Ontario refineryfire has left gas stations with dry tanks and higher prices because the province depends too heavily on imported fuel, an independent retail group says.

Jane Savage, president of the Canadian Independent Petroleum Marketers Association, said the Feb. 15 fire at Imperial Oil's Nanticoke planthas triggered "a very severe shortage."

"I'd characterize it as probably the worst supply situation the industry here in Ontario has seen in decades," she told CBC News Online on Wednesday.

Speaking from her east-end Toronto office,Savage said the shortage has been accompanied by a rise in the wholesale pricescharged by Imperial and other refiners.

But she joined other industry officials in urging driversnot topanic and not to hoard fuel, which she said is unnecessary and would worsen shortages and drive prices higher.

Ontario'sbasic problemis alack of refining capacity, partlya resultof the closing of an obsoletePetro-Canada refinery west of Toronto in 2005, she said.

There have been other recent glitches, however.

"We had a problem at Imperial's other refinery over the holidays," she said. "There's the rail strike, which has chewed up the transportation network pretty badly. So getting product is hard in a landlocked province which is net short of refining capacity."

Supply line long

Driversencounteringlocked-up pumps this week atscores of southern Ontariogas stations —some under Imperial's Esso banner,others supplied bythe company— can testify to that.

Although a small fraction of the province'sthousands of gas stations ran out of fuel,pump prices moved well above 90 cents a litrein many places, up from the 70s inJanuary's mild spell.

Thecrippled refinery normallyconverts 118,000 barrels of crude oila day into about 12 million litres of gasolineand varying amounts ofjet fuel, heating oil, diesel fuel and other products, Imperial spokesman Gordon Wong said.

The fire has temporarily halved its gasoline output and also reduced production of diesel and heating oil, he told CBC News Online.

Imperial hopes to avoid having furnaces go cold at this time of year, he said.

"We're giving priority to heating oil customers."

Savagesaid Ontariois too dependent on refinedfuel landed at Montreal and pumped west by pipeline.

"These are cargos that are on the water and are being traded and diverted into Montreal, so it's European refineries, generally, and eastern U.S refineries."

"The supply line into Ontario is a long one," she continued, "and when you get a refinery that has another problem on top of that, you're into some pretty significant issues, as we're seeing right now."

Aformer Imperial Oil engineer, Savage now representslargeindependents such asCanadian Tire, PioneerandOLCO. Those companies buy their fuel from Imperial and other majors.

"Independents, as I think folks know, are just overgrown consumers. We buy directly from the refiners, just in bigger quantities," she said.

Spread between prices widens

Not only have the prices they pay jumped, but thespread between local andinternational prices has widened, she said.

On Monday, the Toronto wholesale gasoline price (known as the rack price) was 7.7 cents a litre abovea benchmark New Yorkcargo price, she said.

That represents an increase of 3.2 centssince Feb. 14,she said, and the highway diesel fuel spread widened even more.

At the same time, the international price rose about a penny, she said.

She declined to speculate on whether the Ontario shortage hasemboldened operators toraise pump prices beyond their cost increases.

Despite the shortage, shestressed the folly of fuel hoarding.

"Panic would be the worst possible thing here in terms of the public, and only because it would cause more shortages and more price increases.

"There's no need to panic from the public's point of view, but I do want to be very up front with people about the fact that I think our governments need to take some action on improving our supply networks here."

With files from the Canadian Press