B.C.'s gas report shows pricing market is flawed: Premier Horgan
Credit to Author: Rob Shaw| Date: Tue, 12 Nov 2019 20:31:03 +0000
VICTORIA — Premier John Horgan says a new report by the province’s independent energy regulator has failed to clear up confusion over gasoline profit margins at the pump and has only intensified his worry that the market in B.C. is not working for consumers.
“Clearly there is something wrong with the gas market in British Columbia and we want to get to the bottom of that,” Horgan told reporters on Tuesday, following the release of a second report by the province’s energy watchdog that has failed to clear up a 13 cent a litre unexplained price margin on gasoline.
Horgan said he plans to take the issue to Prime Minister Justin Trudeau because the federal government has a lead role to play in identifying and acting on anti-competitive practices.
“I think the federal government has a role to play as well,” said Horgan. “It’s not just about supply and we need more gasoline … we need to have more gasoline here, but why are we paying 13 cents more a litre than anywhere else in the country? Those are questions that still remain unanswered.”
The Horgan government is readying legislation that will force oil and gas companies to hand over sensitive supply and pricing data to provincial regulators on a regular basis, in order to better understand why gas prices can suddenly spike without warning.
The premier’s comments come after a new report by the B.C. Utilities Commission concluded that oil and gas companies have failed to convincingly explain up to 13 cents a litre in extra costs motorists are paying for gas at the pump.
A supplementary report by B.C. Utilities Commission concluded Tuesday that the companies could not adequately shed light on the price difference in new submissions, and so the commission’s original estimate from an August report remains of up to 13 cents a litre in extra, unexplained costs.
Premier John Horgan.
“Some interveners presented a number of factors in an attempt to account for the unexplained difference, but the panel finds their evidence either inconclusive or conflicting, making it difficult to determine an appropriate amount for these factors,” the commission said in a news release accompanying its report Tuesday.
“As such, the panel’s best estimate is that the unexplained difference could potentially range from 10 (cents per litre) to the originally reported 13 (cents per litre).”
The gas companies had argued that the 13 cents a litre figure was “too high and that it should be reduced by as much as 7.7 (cents per litre),” according to the report.
The commission reviewed evidence from interveners and 41 letters of comment from the public since the original August report.
That unexplained margin costs B.C. motorists approximately $490 million annually at the pumps, according to the commission.
“Every one cent additional margin represents $37 million more dollars paid annually by B.C. motorists,” read the report. “This is in addition to any ‘unexplained difference’ in the retail margin.”
The commission also concluded that the most expensive five per cent of gas supply in the Pacific Northwest is driving the price of all gasoline sold in B.C., creating a second margin for gas companies.
And its supplementary report backed up the commission’s original asserts that control of the province’s gas supply and retail outlets are concentrated in a small number of companies, creating an oligopoly.
“The control of the distribution infrastructure gives the wholesale gasoline market characteristics of a natural monopoly,” according to the report.
The original report from August was not allowed to consider whether government-imposed taxes or policies contribute to the high price of gasoline.
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