American refinery blamed for western Canada gas hike
16-cent hike in gasoline prices due to partial refinery closure near Chicago
The sudden jump in gas prices that is raising tempers in Edmonton is being blamed on Canada's proximity to the U.S market.
"If they sneeze, we get a cold," said Roger McKnight, chief petroleum analyst for En-Pro International.
The Prairies and parts of B.C. saw a 16-cent spike in gas prices overnight Wednesday.
McKnight says prices in those areas of Canada are largely determined by American wholesale markets in Minneapolis and Chicago.
A refinery plant in Indiana which supplies those markets went down to 50 per cent capacity recently.
The Indiana plant is America's seventh largest, processing 413,000 barrels of oil a day.
McKnight says that shut-down has driven up fears of a shortage - and forced prices up.
"If I'm a refiner in Edmonton and I see I can get $1.10/L for gasoline in Minneapolis, whereas my price is $1 in Edmonton, I'm going to export that to the United States – or I'm going to raise my wholesale prices to match the U.S. ones," he said.
"And you can just thank NAFTA...Because gasoline can be imported or exported across the border under NAFTA rules depending on which refiner can get the better price on either side of the border."
McKnight says the repairs on the U.S. plant could take up to a month.
He predicts gas prices will likely stay steady at Thursday's rate throughout that time.