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Alberta’s New Oil Legislation Could Disrupt West Coast Fuel Deliveries

Yesterday Alberta’s government launched the latest offensive against neighbor British Columbia by introducing a bill seeking the powers to prioritize oil and fuel shipments with an emphasis on crude oil at the expense of fuels. The bill could disrupt fuel deliveries to the whole west coast of North America, leading to a price spike, Bloomberg reports.

If passed, the bill will give Alberta’s provincial government the authority to ask fuel traders to apply for licenses if they want to export refined oil products. This means that the government will essentially be able to control the amount of fuels that leaves the province. B.C. is a major importer of Albertan fuels, which constitute more than 50 percent of its total fuel imports, and it will be the immediate target of the bill’s effects.

A cut in crude oil to B.C. will also disrupt the operation of the only refinery in Vancouver, in Burnaby, which produces 25 percent of B.C.’s fuels. A spokeswoman for the refinery’s operator Parkland Fuel Corp. told Bloomberg that if the flow along the existing Trans Mountains is cut, the refinery would not be able to operate properly. This will disrupt two-thirds of B.C.’s fuel supply, leading to a spike in imports from the United States. This in turn will likely lead to a gas price rise south of the border, too, in a classic example of the ripple effect.

Related: China To Double Shale Gas Output

The British Columbia government is not backing down, however. Reuters quoted the province’s Environment Minister George Heyman as saying B.C. was “prepared to defend British Columbians’ interests with every legal means available.” Some British Columbians might start having doubts about what their interests are, though, if they are forced to pay more for gas.

Meanwhile, the B.C. government is facing opposition from another direction, this time regarding its LNG plans. The leader of the provincial Green Party, Andrew Weaver, said in an interview with The Star Vancouver this week that B.C. can’t have its cake and eat it, meaning it can’t have ambitious emission reduction plans and encourage the growth of the LNG industry on its territory.

Weaver’s remark referred to recently announced tax breaks for LNG industry players seeking to encourage more projects. “It’s much like Mr. Trudeau is trying to argue we need to triple oilsands … production and build the Trans Mountain pipeline in order to have a climate plan, it doesn’t make any sense,” Weaver said.

By Irina Slav for Oilprice.com

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