Gasoline inquiry finds B.C. motorists paying at least 13 cents a litre too much
Credit to Author: Gordon Hoekstra| Date: Fri, 30 Aug 2019 21:31:39 +0000
A B.C. government-commissioned gas pricing inquiry has found there is an unexplained difference in wholesale gas prices of 13 cents a litre with the U.S. Pacific Northwest market that helps set prices in the province.
It is about six cents in northern B.C., according the inquiry handled by the B.C. Utilities Commission, which delivered its findings on Friday in downtown Vancouver.
The commission estimated that costs B.C. motorists annually about $500 million.
The commission has suggested, given the inquiry’s tight deadline, that the B.C. government consider a one-month comment period for participants in the inquiry to react to the findings and provide additional evidence to provide a more fulsome picture before the province takes any action.
“(The public) should know they are paying at least 13 cents more a litre than they would otherwise pay if the market was more competitive,” said BCUC chairman and CEO David Morton.
The commission also found there were higher retail margins in B.C. than other parts of Canada and this difference has increased since 2015.
The BCUC panel did not find there was collusion among the major fuel players that include Parkland, which operates the Burnaby refinery, Suncor, and Imperial Oil.
Large delivery trucks get set to fill up in front of the giant storage tanks outside of the Parkland refinery site in North Burnaby.
The commission suggested the B.C. government could encourage more refining capacity, acknowledging that would be a challenge as fuel use is projected to decline and there are high environmental costs to building a refinery.
Another option is to use regulation, either of pricing or regulating the supply chain, something sure to be opposed by industry.
Asked if the commission was hamstrung by not being able to look at taxes at the pump, Morton noted those were transparent and known and didn’t diminish the panel’s findings.
Horgan ordered the gas-price inquiry in May when prices at the pump reached $1.70 in the Lower Mainland, saying the public deserved answers about why prices are so much more expensive and variable than in other jurisdictions. At the time, the B.C. Liberals and Alberta government bought ads blaming Horgan and linking his government’s resistance to the Trans Mountain pipeline expansion and taxes to the surging costs.
The commission’s marching orders were to explore factors that may be influencing gas and diesel prices in B.C. since 2015, including refining and retail margins, as well as factors that contribute to retail and wholesale price fluctuations such as access to refineries, amount of fuel in storage, and refinery and pipeline capacity.
Industry players and observers have noted that B.C. only has two local fuel sources, refineries in Burnaby and Prince George. It relies heavily on Alberta for refined fuel products that can be constrained by refinery outages and space on the Trans Mountain Pipeline. Both mean higher costs for transportation, via truck or rail from Alberta, or farther afield in markets in the U.S.
The province is also subject to regulations that don’t exist elsewhere, including a low-carbon fuel standard.
But Morton said those factors had been taken into consideration, explaining seven cents of a 20-cent difference in wholesale prices. The remaining 13 cents remained unexplained.
Said the inquiry’s final report: “The panel finds that the prices in Metro Vancouver area are higher than would be expected under more competitive conditions. The higher price difference cannot be explained by economic theory or justified by known factors in the market.”
more to come…