Nunavik braces for fall fuel hikes

MONTREAL – In Nunavik, as elsewhere in Canada’s North, it will soon cost a lot more to tank up.

That’s because prices for bulk crude have increased dramatically, and some of this increase will be passed right on to Nunavimmiut, although no one is saying yet just how much this will be.

But one thing is certain: fuel prices will rise on Sept. 1, the date Nunavik’s prices are set every year. The region’s two fuel distributors, Halutik Fuels and the Fédération des coopératives du Nouveau-Québec, say they aren’t sure yet exactly how much fuel prices will rise. But according to Shell Canada, supplier to both Halutik and the FCNQ, Nunavik can expect the same level of increase now hitting Nunavut.

Kuujjuammiut now pay $1.17 a litre for gas, while in communities served by the FCNQ, the cost is $1.14.

A 10 per cent price increase would mean the cost of a litre of gas would be as much as $1.28 in Kuujjuaq.

Three communities – Kuujjuaq, Quaqtaq, and Kangiqsualujjuaq – are serviced by Halutik. Their fuel prices are based on what Shell paid when it purchased the fuel. The final retail price also reflects Shell’s costs of doing business in Nunavik, including transport and taxes.

Fuel prices in Nunavik’s other communities, where distribution is handled by the regional cooperative network, the FCNQ, are somewhat lower because the impact of higher fuel price increases is shared among more communities.

“But the prices are certain to go up,” said Claude Savage, the director of the FCNQ’s fuel division.

At the same time as prices rise, fuel consumption is also on the increase. To solve the chronic lack of fuel in Salluit this summer, the FCNQ is building two new reservoirs to the community’s tank farm, which will add an additional capacity of 3.3 million litres.

The largest clients for fuel in Nunavik, the Kativik Municipal Housing Bureau, municipalities, airlines and Hydro-Québec, have already received an estimate of the possible fuel price increases.

A projected increase of about 10 per cent for heating oil will mean “hundreds of thousands” of dollars more in expenses for the KMHB to keep Nunavik’s 1,800 social housing units cozy this winter. This additional money will be reimbursed by the federal and provincial governments.

“But if they’re putting money in this, they’re obviously not putting it in something else,” said the KMHB’s manager, Watson Fournier.

Although the price of jet fuel is also due to increase, Air Inuit does not foresee any price hikes for passengers or freight unless the fuel increase is more than, say, 10 per cent. According to the airline’s operations’ manager, Air Inuit isn’t planning to levy any special tax on tickets to cover fuel price increases, as some airlines have done.

But fuel price increases will mean higher maintenance costs at Nunavik’s 14 airports, says Jack Papak, director of the Kativik Regional Government’s transport department. This could eventually lead to higher landing fees for airplanes, which, in turn, would probably oblige airlines to increase their ticket and cargo rates.

In one year’s time, this year’s increases may seem manageable, particularly if the oil industry analysts’ predictions of more price increases come true.

Makivik Corp. has offered beneficiaries some help with high gas prices by providing a subsidy for hunters from its heritage fund.

And about $700,000 from Quebec’s transport department is also divided every year between Nunavik’s 14 communities to provide a non-taxable subsidy of “not more than $500” to all residents over 16. This money is handed out in October and November to cover the higher cost of gasoline in the region.

In past years, Quebec also gave the KRG money, so residents could apply for rebates of up to $275 a year on airfare.

Meanwhile, Nunavik politicians continue to lobby in Ottawa and Quebec City for a reduction in government fuel taxes. These add around 35 cents to every litre of gasoline sold in the region.