A large explosion and fire at an oil refinery in New Brunswick could lead to higher gas prices in British Columbia.
The massive blast shook the historic port city of Saint John on Monday, sending flames and black smoke high into the sky but causing only four minor injuries.
Officials say the cause of the explosion was a malfunction in the refinery’s diesel treating unit, where sulphur is removed from diesel fuel. There were as many as 3,000 workers at the refinery Monday.
While half of the refinery’s daily production goes to the U.S. northeast, industry observers expect the anticipated closure could affect gas prices right across the country.
“A fire that caused undisclosed damage to the Irving refinery in Saint John, New Brunswick, Canada’s largest, has not yet been fully quantified by markets and comes in a period of lower demand and stronger inventories generally in the U.S. northeast,” said Dan McTeague, senior petroleum analyst at GasBuddy.
“Nevertheless, a more thorough disclosure of damage to the refinery could yield concerns for supply and raise market prices should the plant’s 330,000 barrel a day output be curtailed for an extended period of time. Upside momentum in petroleum prices seen last week could continue into this week with a mix of issues including Hurricane Michael in the Gulf Coast, growing concern for supply constraints ahead of the U.S. embargo on Iran and ongoing issues with Venezuela and Nigeria. Combined with a weaker Loonie due to the effects of pipeline constraints, motorists should look to higher pump prices generally in the weeks ahead.”
McTeague expects motorists to see another two cent per litre increase in Victoria, Vancouver and the Lower Mainland.
Gas prices in Victoria spiked 10 cents last week, due in part to slimmer retail margins and a shortage of gas supply in the Pacific Northwest.
The average gas price in B.C. is 140.8 c/l, which is more than 10 cents above the national average of 128. 4.
– With files from the Canadian Press