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Canada B.C. orders inquiry to make suppliers explain gas markups

The B.C. government wants oil companies to publicly testify about the high premiums they charge for motor fuel sold in Metro Vancouver and some other parts of British Columbia. Premier John Horgan on Tuesday directed the province’s independent energy regulator to launch an investigation into this spring’s record-breaking spike in gas prices.

Mr. Horgan, who has pledged to make life more affordable for British Columbians, is struggling with the issue as both the opposition Liberals and Alberta Premier Jason Kenney blame him for high prices at the pumps.

Mr. Horgan in turn is pointing at Ottawa and at “gouging” oil companies.

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“British Columbians want to know why refining margins are so much higher than in other parts of the country," he wrote in his request to the B.C. Utilities Commission (BCUC), noting that the gross revenue on fuel sold in Metro Vancouver was more than double the Canadian average.

A spokesman for the Canadian Association of Petroleum Producers declined to comment.

The utilities commission will look at a range of issues, including those margins, the reasons for diminishing supply and possible price-fixing. “This should include calling on the oil companies to explain their prices,” Mr. Horgan said.

In a statement, the commission said it will work with the Premier’s office to set the terms of reference, which will determine who can participate and who will be compelled to testify.

“The BCUC recognizes that the price of gasoline is an important matter impacting all British Columbians,” David Morton, CEO of the regulator, said.

Mr. Horgan stopped short of asking the BCUC to regulate gas prices, but that could be the next step if the regulator recommends it. However, the government is calculating that public scrutiny will help put pressure on oil companies, and the federal government, to help reduce prices.

British Columbia does not have enough refining capacity to meet demands for motor fuel, so it relies heavily on the Trans Mountain pipeline for supplies. Refiners can – and do – charge a premium in the Vancouver market because supply is tight and demand is high. But that markup has been, historically, no more than a few pennies a litre. When the B.C. government increased its carbon tax on April 1 by one cent, the refiners’ margin abruptly increased. The wholesale price for gas so far this month is almost 24 cents higher in Vancouver than it is in Edmonton.

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Mr. Horgan also spoke with Prime Minister Justin Trudeau late on Monday, asking Ottawa to open up the taps on refined fuel delivered through the Trans Mountain pipeline. “The PM owns a pipeline that comes into Burrard Inlet, that pipeline is not bringing enough refined product to have relief for British Columbians,” Mr. Horgan told reporters on Tuesday.

The pipeline is regulated by the National Energy Board, and even the NEB isn’t supposed to control what flows through the pipeline. Shippers decide which petroleum products to move, and by law, a pipeline company cannot discriminate between products, or prioritize. In 2018, the pipeline carried less refined product to B.C. than it has in more than a decade.

Mr. Horgan said he believes Ottawa can find a way to intervene. “[The Prime Minister] said that he would look into it, but is constrained by market forces … I am hopeful that his officials will come up with something better than that in the short term.”

In his letter to the BCUC, Mr. Horgan indicated the province’s gas taxes are not on the table. “Provincial taxes are not to blame. ... Cutting taxes would amount to the public subsidizing oil companies as there is nothing to stop companies raising prices in response.”

In the Vancouver area, the total provincial tax on a litre of gas is 34 cents. That includes almost nine cents for the carbon tax, but the largest share goes to pay for public transit – a 17-cent levy for TransLink, the region’s transportation authority.

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