Simone Kearney-Rodriguez is looking forward to putting cash in the register this weekend when the first crowd of cruise ship passengers pull into port in Victoria, B.C., on Saturday, after the last two cruise seasons were cancelled due to COVID-19.
The owner of the Beaver Gift Shop says her family business almost sank without the support of hundreds of thousands of cruise tourists that have kept her afloat for more than 30 years.
“We’re still alive, but it took everything that I had to keep going,” she told CBC’s On the Island.
She’s not alone: according to the Tourism Industry Association of B.C., cruise ships contribute about $2.7 billion annually to the provincial economy, supporting tourism-oriented businesses in coastal cities like Victoria, Vancouver and Prince Rupert.
“We’re a tourist town,” said Bruce Williams, CEO of the Greater Victoria Chamber of Commerce in an interview in the James Bay neighbourhood, where docked tourists stock up on gifts and candy.
“These businesses have always been reliant on tourism and some of them are down 80 or 90 per cent of revenue.”
More than 300 ships are expected to call at B.C. ports between now and November, bringing in upward of a million customers. But along with their tourist dollars are some concerns, including the possible arrival of new cases of COVID and the environmental impact of giant ships floating through delicate coastal ecosystems.
The first ship to arrive on B.C.’s coast is the Koningsdam, part of the Holland America line.
The ship hosts a seven-day cruise from San Diego, Calif., to Vancouver, and will arrive at a Victoria port Saturday.
Under federal regulations, cruise ship passengers arriving in Canada need to be fully vaccinated and tested for COVID-19 before boarding at departure points, and are monitored before arrival in Canada.
Dr. Horacio Bach of the University of British Columbia’s faculty of medicine says cruise companies appear to have learned lessons from the early days of the pandemic, when COVID-19 outbreaks forced them to stay at sea for weeks, and now have strong testing regimes and medical facilities on board to prevent problems.
Recent research by environmental organizations warns the industry is treating the province’s sensitive coast as a dumping ground for polluted wastewater, and that what bodes well for business is bad news for the environment.
“B.C. is the toilet bowl for the cruise industry,” says Anna Barford, a shipping campaigner at environmental advocacy group Stand.earth.
Barford says cruising creates more greenhouse gas emissions than air travel, and lax Canadian regulations mean billions of litres of potentially dangerous sewage, greywater and washwater are likely dumped in B.C. coastal waters every year.
According to a report released last July, Stand.earth found the environmental benefits of cancelled cruises were “astonishing.” It showed an estimated 220 million litres of sewage, 1.8 billion litres of greywater, and 31 billion litres of washwater — enough to fill more than 13,000 Olympic swimming pools — have been kept out of the Salish and Great Bear seas.
Greywater originates as drainage from sinks, galleys and dishwashers. Washwater is generated by cruise ship scrubbers that are fitted on the vessel’s exhaust system and pull in seawater to filter sulphur dioxide pollutants out of marine fuel.
In a March report from the World Wildlife Fund on vessel dumping in Canada, scrubber washwater — which is up to 100,000 times more acidic than seawater — accounted for 97 per cent of generated waste nationally.
That report found cruise ships were the top producer of wastewater despite making up only two per cent of the 5,546 ships studied in Canadian waters in 2019.
U.S. vs Canadian regulations
Barford says the laws governing cruise ships on the B.C. coast pale in comparison to those in California — where ships cannot use scrubbers and must burn cleaner fuels — and Alaska, where on-board engineers take water samples, observe environmental practices and report on problems.
This, says Barford, is what needs to happen in Canada as well.
On April 4, Transport Canada, which sets cruise ship regulations, announced stricter measures for discharging greywater and blackwater (wastewater from bathrooms and toilets). But those regulations, says Barford, are only voluntary.
“The Government of Canada plans to make these changes permanent through regulations, and appreciates the cruise ship industry’s willingness to pursue these measures in the interim,” said Transport Canada in a statement.
Without banning scrubbers, insisting on cleaner fuel and putting observers aboard vessels, the B.C. coast will continue to bare the brunt of “prioritizing profit over ocean health and communities,” said Barford.
The industry also creates significant carbon emissions.
According to the Germany-based Nature and Biodiversity Conservation Union, a single cruise ship accommodating 4,000 passengers is capable of emitting as much carbon dioxide as 85,000 cars.
That’s a challenge for Victoria’s own climate goals. At the end of 2019, B.C.’s last full cruise season, the Greater Victoria Harbour Authority reported that cruise ships and the infrastructure that support them emit the equivalent of 12,136 tonnes of carbon dioxide — roughly three per cent of total emissions generated in the entire Victoria region.
Tightening the rules
On March 1, the Vancouver Fraser Port Authority announced ships at berth or at anchor can no longer discharge scrubber washwater. In that announcement, the authority said it will be phasing in an eventual ban on scrubber systems altogether.
As of Friday afternoon, Transport Canada had not responded to CBC when asked if they are considering banning scrubbers or adding observers to cruise ships in Canadian waters.
B.C.’s Transportation Minister Rob Fleming told On The Island Friday the federal government is working with industry this season to clean up cruising.
“In reality, the post-pandemic cruise industry as it relates to discharge in Canadian coastal waters will be a much stricter regime,” said Fleming.
On The Island8:56We spoke with BC’s Minister of Transportation and Infrastructure about the upcoming cruise ship season
He said the province is looking at installing shore power in Victoria so cruise ships have the option of plugging in and running on “clean, green energy” instead of burning bunker fuel, reducing emissions.
According to the Greater Victoria Harbour Authority, the ships account for 96.3 per cent of all greenhouse gas emissions at the city’s cruise terminal.
Our planet is changing. So is our journalism. This story is part of Our Changing Planet, a CBC News initiative to show and explain the effects of climate change and what is being done about it.
Canada gas prices: How is the price of gas set? – CTV News
Amid high hopes of a return to normal with the end of COVID-19 restrictions, this year may be defined by another concerning trend: the rising price of gasoline.
Exceeding an average of $2 per litre across the country for the first time this month, the cost of gas has set a new all-time high in Canada, with the added toll coming at a time of record inflation and the start of what is often considered the summer driving season.
But what exactly is causing the increase and what are Canadians really paying for at the pump?
CTVNews.ca spoke to experts about what goes into the price of gas, the effect of refinement on high prices, concerning trends around diesel, and how costs could dissuade consumers from driving altogether.
A number of factors play into the price tag drivers see when they fill up their vehicles.
One, which may not come as a surprise, is the price of oil. Due to the war in Ukraine, the price for a barrel shot up in recent months, with global benchmarks Brent Crude and West Texas Intermediate selling in excess of US$100 a barrel.
Russia is also the world’s third largest producer of oil, making up 11 per cent of the global share.
“So we’re at the mercy of international markets for better or worse,” Werner Antweiler, director of the Sauder School of Business Prediction Markets at the University of British Columbia, told CTVNews.ca in a phone interview on May 17.
Beyond the price of oil, different margins also factor into the price of gas.
They include the refining margin, which comprise the cost to refine, store and deliver. More specifically, it is the difference between the cost of crude and the wholesale price of gas.
After that, there is the retail margin, which goes to gas stations, and then the various federal, provincial and sometimes regional taxes that are added on.
The Canadian Fuels Association says, in 2021, crude oil made up 39 per cent of the price for regular gasoline, followed by 35 per cent for taxes, 20 per cent for refining and six per cent for distribution and marketing.
Generally, the price of gas reacts fairly quickly to changing oil prices, Antweiler said, a point other experts say is true. Competition between gas stations does vary depending on where in the country you live, which can play a role in what regional gas prices will be.
But price fixing or “collusion” is rare, Antweiler said.
Drivers in Quebec may remember one example from 2008, when several companies and an individual pleaded guilty and were fined in connection with a gas price-fixing scheme.
In practice, Antweiler said the retail margin for gas stations is relatively flat at around 10 cents per litre in most places where there is competition.
What is “peculiar” now is the volatility in the refining margin, which in the Vancouver area has shot up to about 70 cents per litre from 45 cents previously, Antweiler said.
This stems from issues around transportation and capacity constraints.
“It’s not the gas stations or the retailers, it’s the wholesalers,” he said.
Roger McKnight, chief petroleum analyst for En-Pro, stressed that the country is not unified on how gas prices are set.
Anywhere east of Thunder Bay, Ont., will tend to follow traders on Wall Street, specifically the futures price for oil, he said.
If the futures price rises one day, the price at the pump will generally follow 48 hours later.
West of Thunder Bay, the price of gas tends to follow more closely with the global price of crude oil, with the exception of lower mainland B.C. which is more aligned with wholesale movements in Seattle, Wash.
“So when you get right down to it, the day-to-day prices across Canada follow different markets,” McKnight said in a phone interview on May 17.
SUPPLY AND DEMAND
At the end of the day, the issue is a classic case of supply and demand.
“The supply is very, very tightly in sync with demand,” Ian Lee, an associate professor at the Sprott School of Business at Carleton University in Ottawa, told CTVNews.ca in a phone interview on May 17. “There’s no slack in the system to use slang English.”
The COVID-19 pandemic greatly reduced the demand for gas, as lockdown measures meant people largely worked from home.
As more sectors of the economy reopened, demand for gas increased sharply.
But Lee said oil producers have taken a longer time to increase production, with previous pandemic-related shutdowns making the demand for gas uncertain.
“We’re paying, all of us, higher prices than we ought to be because of the shortages at the refinery level, so that’s what’s exacerbating the problem,” Lee said.
Similar to Canada’s housing crisis, he believes the solution is to bring supply back into the marketplace. But in the short run, it “hurts like hell.”
The U.S. Energy Information Administration, which is part of the U.S. Department of Energy, releases weekly reports on the status of petroleum.
Its latest report, released May 18, shows that U.S. commercial crude oil inventories, excluding the Strategic Petroleum Reserve, fell by 3.4 million barrels from the previous week and, at 420.8 million barrels, is 14 per cent below the five-year average for this time of the year.
Motor gasoline inventories are about eight per cent below their five-year average, while distillate fuel, which includes diesel, jet fuel and heating oil, is down approximately 22 per cent from its five-year average.
“So when your supply side is all in negative and your demand side is all in positive … the consumer’s going to end up paying for that,” McKnight said.
OPEC, or the Organization of the Petroleum Exporting Countries, has said it will not increase production to compensate for lost Russian oil, of which a number of European countries, as well as Canada and the U.S., are boycotting. OPEC and its allied countries, which together are known as OPEC+, also includes non-member Russia.
Earlier this week, oil giant Saudi Aramco, which is 98 per cent owned by the Saudi government, said its profits had soared more than 80 per cent in the first three months of the year, causing it to overtake Apple as the world’s most valuable company.
The Utah State Capitol, rear, is shown behind an oil refinery on May 12, 2022, in Salt Lake City. (AP Photo/Rick Bowmer)While the price of retail gas may be top of mind for most consumers, what may be overlooked is the unusual surge in the cost of diesel.
Since diesel is used across the commercial sector, from heavy equipment to transportation, this issue is probably the most worrisome, Antweiler said.
“Diesel is the fuel of commerce and so this cost will get passed on to consumers,” he said.
This is in part being driven by missing feedstock, or the raw materials that refineries need of which Russia is a source, making it much harder to refine diesel.
Refineries need natural gas in order to make hydrogen, which is used in the refining process and also has become more expensive, Antweiler said.
Refineries tend to switch their output to gasoline during the summer to accommodate the increased demand and stocks of diesel fuel were already low coming into 2022.
Refining capacity is also limited and falling in North America and Europe, Antweiler said.
“The bottom line is that the market for diesel fuel is complex, and follows its own market logic that is not the same as for gasoline,” Antweiler said in a follow-up email to CTVNews.ca.
“Mostly, the extra demand from Europe is spilling over to North American markets. If refineries rush to make more diesel, this will lower output of gasoline. So if prices for diesel start coming down, they will go up further for gasoline.”
High gas prices are seen in front of a medical billboard, May 11, 2022, in Milwaukee, Wis. (AP Photo/Morry Gash)
How drivers respond to persistently high gas prices is something experts will watch for.
Lee predicts that if there is any reduction in demand for gas, it will be the result of “demand destruction,” caused by prices rising so much that it “literally kills some demand.”
With gas, people may end up driving less often, switching to smaller cars, taking mass transit, carpooling, working from home or potentially moving closer to work.
But whether that falloff in demand occurs, which will be known by measuring the average kilometres driven by Canadians, won’t be known for another year, Lee said.
“That’s why I don’t think there’s any rioting on the streets yet at $2 a litre,” Lee said.
“As painful as it is, the reaction from consumers is grumbling, a lot of grumbling for sure, but it’s been muted and I think it’s because consumers, individuals, face options to mitigate the effect of the price.
“I think if natural gas to heat homes or home heating had risen by the same magnitude, I think you would have seen riots on the streets.”
WHERE DO WE GO FROM HERE?
Concerning the price of crude oil, Antweiler doesn’t see it going much beyond US$120 a barrel unless something occurs to make the situation worse.
A lot of operations shut down during the early part of the COVID-19 pandemic as demand plummeted, and Antweiler said producers will be incentivized to increase production although this will take time, meaning prices will remain high throughout the summer.
For McKnight, the answer to when this will stop is less clear.
“I’d be a multi-billionaire if I could answer that question,” he said.
Nevertheless, he said governments could look at the HST and consider capping the amount that is charged on a litre of gasoline.
It’s a point Lee also raised, saying governments could temporarily suspend certain taxes on gasoline.
Alberta has temporarily paused collections of its gas tax, which has cut the inflation rate slightly in the province.
Lee said he would not expect gas to be more than $2 per litre a year from now.
But the distress caused by the price of oil could lead to some policy changes in the United States, he said, with Americans potentially shifting their views on pipelines as more view energy as a national security issue.
With files from CTV News and The Associated Press
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