Motorists in the Vancouver region pay 13 cents more per litre of gas than others in the Pacific Northwest for reasons that cannot be explained by normal market forces, an inquiry commissioned by the B.C. government has found.
The 13-cent differential in B.C.’s south, and a six-cent differential in the north, mean that the average economic cost for B.C.’s drivers amounts to about $490-million a year, British Columbia Utilities Commission chair and chief executive officer David Morton said Friday.
“I think [people] should know that they’re paying at least 13 cents a litre more than they otherwise would pay if the market was more competitive,” he said.
The commission was directed to investigate factors influencing gasoline and diesel prices since 2015 but exclude the effects of provincial enactments or policy. Taxes, for example, were excluded from the prices the commission looked at.
Bruce Ralston, B.C.’s Minister of Jobs, Trade and Technology, said the report is validation for those who feel they are being ripped off when they fill up.
“Today’s report from the utilities commission shows that there’s significant evidence to support people’s view that price gouging exists in the market,” he said Friday.
Wholesale prices in northern B.C. are based on wholesale gasoline prices in Edmonton, while wholesale prices in southern B.C. are set based on those in the Pacific Northwest of the United States because a similar price is considered justifiable, Mr. Morton said.
Prior to 2015, prices in Metro Vancouver and the rest of Western Canada were closely correlated, with a price gap of about five cents. However, by early 2019, the gap had widened to about 20 cents.
The commission found some factors that have changed since 2015, including higher crude prices, Trans Mountain Pipeline capacity constraints, higher costs for retailers and market volatility. But even so, 13 cents of that differential cannot be explained.
It did not find evidence of collusion among retail operators or cartel behaviour but said that refiner-marketers have direct control over pricing in about one-third of B.C.'s retail stations.
Expansion of the Trans Mountain pipeline does not guarantee lower gas prices as it would depend on how the pipeline is used, Mr. Morton said.
“Even if cheaper gas from Alberta was available, as long as pricing is based on Pacific Northwest spot price, customers would not see the benefit of that," he said.
The commission said that regulation “could potentially reduce the wholesale and/or retail margins to that earned in comparable jurisdictions and reduce price volatility.” However, it added that the scope of the inquiry was not sufficient to determine if this approach would be beneficial.
Reached for comment, both Suncor and Parkland Fuel Corp. said they will be taking time to review the report and determine next steps.
B.C. Premier John Horgan ordered the review in May, when prices at the pump reached $1.70 a litre, saying gas and diesel price increases were “alarming, increasingly out of line with the rest of Canada, and people in B.C. deserve answers.”
He tasked the BCUC with overseeing the inquiry; a three-member panel chaired by Mr. Morton began oral proceedings in mid-July.
The terms of reference deliberately excluded provincial enactments such as taxes, whose effects the government said are already known.
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