London News & Search
There’s pain at the pumps this Labour Day weekend as the ripples of hurricane Harvey wash over the continent.
London-area prices rose at least five cents a litre overnight Thursday to about $1.22 a litre, according to a survey by the London-based Kent Group. Windsor, Brantford and Sarnia were slightly higher at $1.23 a litre, which is also the average for Canada.
And Dan McTeague, a senior analyst with Gasbuddy.com, warns of a possible nine-cent-a-litre jump this weekend.
The big question: How long will the higher prices last?
About one-third of U.S. refining capacity is offline, disrupting supply to the East Coast, which competes directly with Canadian markets. “Once things start coming back online, prices could retreat fairly quickly. Supplies were fine before the hurricane hit,” said Jason Parent, a vice-president of Kent Group in London, noting that prices normally drop after Labour Day as the summer driving season winds down.
Spencer Knipping, an Ontario Energy Ministry analyst, said some Gulf Coast ports in Texas are reopening and oil tankers are on the way from as far away as Singapore to replenish U.S. supplies.
There have been comparisons to hurricane Katrina, which saw prices spike to more than $1.30 a litre, but Knipping said Harvey’s destruction is more widespread.
“Some analysts are saying Harvey could influence the market right until February or March. Refining profits are very good and some refineries could postpone maintenance, causing problems down the line.”
McTeague said the incredible floods that followed more than a metre of rainfall on the Texas Gulf Coast are a worst-case scenario.
“Flooding is worse than high winds. Those refineries are built to withstand a Category 5 hurricane, that’s the easy part. Flooding is not easy.”
McTeague said Ontario’s lack of refinery capacity puts the province at the mercy of big U.S. markets.
“We are price takers . . . Prices here go up as a defence mechanism, so if there is a shortage, the Americans don’t come north to buy what limited (supplies) we have.”
London News & Search