Citing the war in the Middle East and rising global fuel prices, BC Ferries says it plans to implement a temporary five per cent fuel surcharge as of Jun. 16, just three days after Vancouver will host the first of seven FIFA World Cup matches.
A statement from BC Ferries CFO Dallyn Willis says like many across the province, the company is feeling the direct financial impact of high fuel prices.
“We’ve used the fuel deferral account to absorb those increases for as long as possible, but given the sharp and persistent rise in these costs, we’ve reached a point where a temporary fuel surcharge is needed. We’re taking this step to carefully manage those pressures in the most measured, gradual and responsible way possible while fuel prices remain elevated,” said Willis.
Since March, BC Ferries says fuel prices around the world have jumped more than 40 per cent. Meanwhile, the average price of gas at retail stations in Metro Vancouver has been similarly high, remaining above the $2-per-litre mark for months.
The increase is being driven by market instability caused by the U.S.-Israeli-led war in Iran and the backlog in the Strait of Hormuz.
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“BC Ferries uses a fuel deferral account authorized under the Coastal Ferry Act to help smooth short-term fuel price volatility over time rather than immediately passing sudden market spikes directly onto customers,” the company stated.
“While BC Ferries has absorbed rising fuel costs in recent months, fuel prices have continued to rise sharply and remain elevated. The 5 per cent surcharge was determined after modelling a range of fuel price and revenue scenarios and was selected as the most balanced approach to help manage sustained fuel cost pressures while minimizing impacts to customers as much as possible.”
It says the scenarios are based on several factors, including how long elevated prices are expected to continue, and how far fuel prices rise above the estimated price levels implemented at the beginning of the current regulatory term.
If fuel prices drop, BC Ferries says the surcharge will either be reduced or eliminated. The company promises to continuously review market conditions.
The move follows in the steps of some airlines which have also added or increased fuel surcharges in response to the war.