Gasoline shortage in Nova Scotia blamed on loss of Imperial refinery
Refineries also shifting to home heating oil production
Nova Scotia's Business Minister Mark Furey says he "understands" Nova Scotians' frustration at being inconvenienced by ongoing shortages of gasoline that began on Saturday and continue in some parts of the province.
But Furey says his government doesn't plan to introduce regulations to prevent future runouts.
"The province has no role in managing the supply of fuel, that's the responsibility of industry," he told journalists.
"The responsibility of the province is specific to pricing. So what's important here is we continue to engage industry and we clearly understand the contributing factors to these circumstances and work going forward to mitigate these circumstances."
The "circumstances," as Imperial Oil spokesperson Merle MacIsaac described them, were the delay of vessels carrying gasoline. Imperial is refusing to comment on an explanation provided by one of its customers, Dave Collins, the vice-presdient of Wilson Fuels.
Gasoline shipments diverted
Collins told CBC gas stations were rationed starting Friday because two cargoes, one from the Gulf of Mexico and the other from Europe, didn't meet all of Imperial's "quality control checks" and were diverted elsewhere.
Collins said it wasn't until after the arrival of a third ship at Imperial's Dartmouth terminal on Saturday that gasoline became available to service stations on the mainland starting at 8 a.m. Monday.
"Obviously there have been errors made in the supply of fuel to N.S.," Furey told CBC news." I want to continue discussions with industry to determine what the contributing factors were and ensure these matters don't re- appear based on error."
Roger McKnight, chief petroleum analyst with En-Pro International, a commodity consulting firm in Oshawa, thinks the shortage Nova Scotia experienced flowed from Imperial's decision to shut down its 94-year-old refinery and replace it with a shipping terminal.
'Large infrastructure hiccup'
McKnight says while refineries are forced to keep a larger inventory of petroleum, that doesn't apply to terminals where ships simply unload the gasoline and trucks distribute it to service stations.
"For a fuel terminal to supply something, it has to have supply," noted McKnight. " I think this is a very large infrastructure hiccup that somebody has to correct. It certainly isn't the customer, it's the supplier which is Imperial Oil."
Larry Hughes is a professor of electrial engineering at Dalhousie University. Hughes has spent more than a dozen years researching energy security and suggests other factors may have contributed to why Nova Scotia woke up to find itself literally out of gas.
"Demand for gasoline is usually stable at this time of year in the U.S.," says Hughes. "Uncharacteristically, demand has continued to rise, driven by cheap prices. Refineries, as they do this time of year, are cutting back on gasoline production in favour of heating fuel.
"By dropping the price in N.S., the regulator appears to have caused demand and subsequently an unexpected shortage," he said.
Pipeline would not make any difference
"One other point.The gasoline shortage disproves the argument [put forward by former Natural Resources minister Joe Oliver] that the Energy East pipeline would improve energy security in eastern Canada. Energy East would not have made any difference to what happened this past weekend".
Collins suggests the industry look at finding a way to build storage tanks for gasoline, as it does now for home heating oil, considered a necessity in the winter months.
Furey says he's been advised discussions around building storage capacity and how to pay for it have begun — almost two years after Imperial announced its decision to close its Dartmouth refinery.
Meanwhile, McKnight says this gas drought could act as a wake-up call for small gas stations who have so far resisted changing their pumps and equipment to fill up with gasoline from Irving Oil containing ethanol.
Ethanol still used in some gasoline
"You've got the largest refinery in the country sitting next door in New Brunswick," points out McKnight.
"You shouldn't have any problem! Unfortunately, I think some of the smaller retailers in Nova Scotia can't accept Irving gasoline because of the ethanol content. But I see there are still small independent stations using ethanol in other parts of the country, so I think that's a pretty weak excuse for running out in Nova Scotia."
Retailers like Wilsons Fuel have hedged their bets somewhat by equipping their high-volume gas stations in urban areas to use Irving gasoline when supply is in doubt. The last time there was a run on gas in Nova Scotia was during a lightning strike at the former Imperial refinery.