by Peter Boag, Former President & CEO, Canadian Fuels Association

Taking our energy supply for granted

 |  Uncategorized

Canadians enjoy unparalleled access to secure and reliable energy.  When we need to turn on the lights, turn up the furnace or fuel our vehicles, an extensive ‘behind the scenes’ system (fixed infrastructure, mobile assets and people) is working to enable the energy services – heat, light, transportation – that are essential to our daily lives as well as our economy.  We take for granted that our energy needs will be met 24/7, with rare exceptions, that are usually the result of weather events or other unforeseen circumstances that can temporarily disrupt the energy distribution system. 

My last Commentary highlighted the importance of a predictable, coherent and consistent regulatory environment to the reliable, ‘on-demand’ delivery of refined fuels to Canadians.  

Several developments over the past few weeks highlight how other decisions and actions can potentially upset the equilibrium of the fuel distribution system and jeopardize Canadians’ access to secure and reliable energy.

On February 26, the St. Lawrence Seaway Management Corp. announced its decision to delay the opening of the Montreal to Lake Ontario section of St. Lawrence Seaway until April 1.   According to the Chamber of Marine Commerce, this could result in 100 fewer ship transits and delay the transportation of critical supplies and products along the Great Lakes-St. Lawrence Seaway transportation and trade corridor.

Fuel producers rely on the St. Lawrence Seaway throughout the commercial navigation season – for receiving crude oil and other feedstocks, and also to transport gasoline, diesel, and jet fuel to customers.   A predictable schedule for Seaway operations is an essential component of the effective and efficient operation of Canada’s fuels supply chain.

This disruption to marine transport comes at a time when the operation of Canada’s rail transportation system has been significantly compromised by rail blockades, compounding an already challenging supply chain logistics situation.  Rail is a vital transportation mode for fuels, where pipeline and marine transportation is unavailable or doesn’t have the capacity to transport the needed volumes.  Some parts of Canada rely exclusively on rail to transport fuel from refineries to the distribution terminals that supply retail outlets.  Rail is also the primary transport mode for certain refinery inputs and for energy products like propane.  Prolonged disruption of the rail transport system will pose problems for the distribution of fuels in some markets.   And the risks don’t end when the blockades come down.  Federal Transport Minister Marc Garneau has confirmed that the effects on the rail system will linger for “weeks and months”. 

Finally, a series of recent refinery, terminal and bulk plant blockades in western Canada disrupted fuel distribution operations in several communities.

Every complex system requires built-in resiliency to mitigate the risks of unplanned and unforeseen circumstances, but this ‘trifecta’ of circumstances should be a wakeup call to Canadians who take filling up their vehicle at their station of choice for granted.  Yes, we have a well-developed, effective and efficient system for ensuring Canadians have reliable access to the fuels they need, when and where they need them, and refiners and fuel distributors have contingency plans that allow them to respond to short term supply chain pressures.  But the system is not immune to external ‘shocks’ of all kinds that can compromise its effectiveness and efficiency and pose risks to that access over the longer term.  Everyone has a stake in preventing and mitigating decisions and actions that put secure and reliable access to energy at risk. 

As our energy systems transform to meet the challenges of climate change, Canadians will continue to need and expect secure and reliable access to energy (regardless of the source).  The path forward for Canada must make this a fundamental priority.  No Canadian wants a future where the furnace and lights don’t come on and the family vehicle has no fuel. 

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