Kamloops gas station out of fuel on Wednesday afternoon (image credit - CFJC Today)

By Michael Reeve

FUEL SHORTAGE

Kamloops fuel shortage linked to new ethanol requirements in the USA

Aug 3, 2022 | 4:22 PM

KAMLOOPS — While the price of gas has now dropped below $2 per litre, some Kamloops residents may have had a hard time finding fuel in recent days. On Tuesday a few stations in Kamloops ran out of fuel and were forced to shut down their pumps.

Petroleum experts are linking the shortage to the same cause of the spring surge in prices, the supply of ethanol.

Canada imports approximately two-thirds of its ethanol from the United States. U.S. President Joe Biden changed the ethanol requirement for blending in June of 2022 and that has led to increased demand in the U.S., but production has not increased to cover the new requirements.

“Over time this will get resolved but right now producers are scrambling for supply. And the reason why? There is gasoline in B.C. and Alberta but they can’t supply, it doesn’t meet the fuel specifications required by government mandates. So, that is the reason you are seeing all the companies crumbling. That is why you are seeing the retail marketing margin, which is where the blending occurs, they have been very expensive or higher,” said Vijay Muralidharan, Managing Director for R Cube Economic Consulting Inc.

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While most stations in Kamloops have received a new shipment of fuel and have reopened, it’s likely more shortages could be on the way. The demand in the United States will drop as we approach September, but there will be a lag before Western Canada sees any benefit from it.

“It’s just a lingering issue, you will have a week of shortage and then back to supply. The refiners and marketers adjust to requirements here and there. You are going to see this throughout this year. But the good thing is that come September, the demand in the U.S. falls. That is going to be a respite for Canadians because our pricing is dependent on the U.S.,” said Muralidharan.