Irving Oil explosion unlikely to affect gas prices: experts
Dan Healing, The Canadian Press
Published Tuesday, October 9, 2018 12:09PM EDT
Last Updated Tuesday, October 9, 2018 1:21PM EDT
The explosion that rocked Irving Oil's Saint John refinery on Monday is unlikely to affect the price of gasoline in Canada, according to experts.
The quick return to the facility by contractors and the fact its fuel storage tanks were likely full to ensure customers were supplied during a scheduled maintenance shutdown mean the refinery interruption should have little short-term impact on consumers, they said.
"It comes at a fairly good time for motorists as far as inventory reports in the U.S. Northeast, New England, are concerned," said Dan McTeague, senior petroleum analyst at GasBuddy.com.
Gasoline prices in the key New York Harbour market were actually trending lower on Tuesday morning as storage levels in the northeastern U.S. are 20 per cent higher than they were a year ago, said McTeague.
"I note the large number of people jumping the gun yesterday looking at the market and saying, 'You know, this is going to mean a major spike in the price of gasoline, which, I think, is intuitive," he said. "But it's certainly not being borne out by the early indications in the market."
Even if the refinery's maintenance shutdown is extended because of damage from the explosion, the fact it is on the ocean means alternative supplies of fuel can easily be brought in from offshore to ensure there are no shortages and resulting price increases, said Michael Ervin, senior vice-president at the Kent Group Ltd.
"It sounds to me as if the explosion, the incident, is only going to have a temporary effect," he said.
"I also understand the unit involved was a sulphur treating unit for diesel so, in theory, so long as the refinery can operate around that, then gasoline production is not likely to be impacted."
There were as many as 3,000 workers at the refinery at the time of the explosion but only minor injuries were reported.
The refinery is the largest in Canada and produces more than 320,000 barrels of energy products per day, most of which is sold in the United States.
Crews working to maintain the refinery were to be back on site Tuesday evening after it was determined there are no lingering air quality or safety concerns after the explosion Monday, the company said.
"Through our continuous air monitoring, we have determined that there are no concerns with regards to air quality," Irving stated.
"Accordingly, we are currently planning to have our turnaround team back on site this evening for the night shift. Our plans for returning to full turnaround mode will be discussed at that time."