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A seniors’ advocate in Yellowknife says she’s concerned the global jump in oil prices could affect others who heat their homes with oil in the territory.
“Seniors are having to make hard decisions between do I get fuel this year, this week, or do I pay electricity or can I get food or can I afford my prescriptions?,” Karen Willy, the executive director at Northwest Territories Seniors’ Society, said.
Oil prices jumped globally after the U.S. and Israel launched an attack on Iran on Feb. 28.
Following the attack, Iran blocked off the Strait of Hormuz — a narrow passage in the Gulf of Persia — and threatened to attack vessels attempting to pass through it. The route is vital for oil shipping as roughly one fifth of the world’s oil transits through the strait.
Willy, 64, uses a mixture of oil and electricity at home. She said she’s worried about her next bills but also realizes she’s more fortunate than most seniors in the territory.
“I have a full-time job and I have a pension and so I’m not affected as badly. But I can be, right? You never know when you’re going to have to stop working as you get older due to health issues,” she said.
N.W.T. expects increased oil costs
The government of Northwest Territories anticipates it will have to pay higher costs for fuel it purchased after the first week of March.
The territorial government is in the process of securing various petroleum products for its winter fuel resupply program, which provides diesel, gasoline and other fuels to communities via winter roads.
“Purchases have already been made in that timeframe and continue to be made during the winter resupply program. Invoices have not yet been received, but posted wholesale pricing from all suppliers are showing increases,” a Department of Infrastructure spokesperson wrote in an email to CBC.
The department added it had purchased roughly 75 per cent of the total winter resupply volume before the first week of March.
It also said fuel prices will be adjusted once the winter resupply is finished.
These cost adjustments happen twice a year — following the summer barge resupply and winter road resupply — to ensure the price residents pay matches what it actually costs the government to buy, deliver and store.
Whether these global price increases will lead to higher bills for residents remains to be seen.
The department said in their email that “residual inventory purchased at a previous price point may help to mitigate increases with respect to supplies and potential future price increases.”
Electricity prices could also increase
Electricity prices in the territory could also be impacted if oil prices continue to climb over a longer period of time.
In an email to CBC, the Northwest Territories Power Corporation said international conflicts can impact electricity rates.
“The price of diesel is an important factor in the cost for NTPC to deliver power to its customers. Prices can fluctuate wildly over time for a variety of reasons, including international conflicts,” Doug Prendergast, the communications manager with the Northwest Territories Power Corporation wrote.
However, Prendergast added that costs wouldn’t immediately surge for customers.
“If the price of fuel remains either significantly higher or lower than the price that was built into rates, NTPC can apply for an adjustment,” he said.
Willy said while prices are continuing to rise, the territorial government could increase senior’s home heating subsidy and lower the eligibility threshold so that more people could apply.
“Everybody’s gonna pay a little more, but those with limited income often can’t pay a little more or they have to give up something like food, electricity, prescriptions, pets, and those are hard things.”
International tensions hit home
Most oil used in the territory comes directly from Alberta, but that doesn’t shield the territory from global price hikes.
“[Oil] is really a globally traded commodity and therefore anything that happens anywhere in the world will have a direct impact on oil prices everywhere else,” Stephan Schott, a professor at the School of Public Policy and Administration, said.
Since oil is the same everywhere and can be shipped easily, it can be used anywhere in the world, he explained. That means that when the global demand is high — as it is right now —the price goes up for everyone.
On Wednesday, West Texas Intermediate (WTI), the benchmark for oil prices in North America, hit $98 US per barrel, up from the $67 US per barrel seen on the eve of the U.S. and Israel’s first attack on Iran.
