Irving Oil concerns pushed gas prices up
Irving Oil Ltd. is denying having any production outages at its Saint John-based oil refinery after concerns of problems caused gasoline prices to spike up on Thursday.
Carolyn Van der Veen, a spokeswoman for Irving Oil, said in an email on Friday that the refinery suffered a "minor upset" on Thursday.
"But there are no production problems at the refinery. It's normal operations here and business as usual," Van der Veen said in an email.
While Irving Oil is denying any ongoing problems at its New Brunswick refinery, concerns over possible production issues caused gasoline markets in New York to spike upward on Thursday.
New York Harbor gasoline differentials increased by at least three cents per gallon after the Irving news spread, Reuters reported on Thursday.
Irving Oil's refinery in Saint John produces 300,000 barrels of oil per day and is the largest refinery in Canada.
The refinery is a major gasoline supplier to the northeastern United States. The company estimates that its Saint John refinery accounts for 45 per cent of New England petroleum product imports.
Andrew Lipow, the president of Lipow Oil Associates LLC in Houston, said market watchers were tipped off to potential problems at the refinery by Irving's actions.
"We've seen over the past few days Irving Oil come in and buy gasoline supplies out of New York Harbor and usually those types of actions are indicative of a supply problem," Lipow said.
"That's what we typically see happen in the marketplace, whether it's Irving or any other supplier of gasoline that routinely is selling into a particular market, when they turn into a buyer, the market suspects that a refinery operating problem has occurred."
Gasoline prices were pushed higher as the uncertainty over the Irving Oil refinery's production added to supply concerns.
Earlier this week, Shell Canada blamed the delayed reopening of an oil refinery in Sarnia for a gas shortage in parts of southern Ontario, including Toronto and Windsor. Some Shell stations in Toronto ran out of regular gas because of the delivery problems.
Nova Scotia drivers ran into similar problems earlier in August. Gas stations started running out of fuel after the Imperial Oil refinery in Dartmouth, N.S., went offline following a thunderstorm in July.
The refinery is still offline but Imperial has agreements with Canadian and international suppliers to import gasoline to meet the average fuel consumption rate for this time of year.
Lipow said a scheduled outage at the refinery in Come by Chance, N.L., has also caused markets to tighten up.
"It's very difficult for the refining system to handle multiple refinery outages that are concentrated in one geographic region at the same time," Lipow said.