Vaughn Palmer: With little help from industry, B.C. gas pricing inquiry ends in frustration
Credit to Author: Hugh Dawson| Date: Wed, 13 Nov 2019 02:03:07 +0000
VICTORIA — After finding that B.C. consumers were being overcharged by hundreds of millions of dollars every year for gasoline, the B.C. Utilities Commission gave the industry a fair chance to respond.
A commission panel acknowledged that the NDP cabinet had given it only three months to conduct its inquiry into the complexities of gasoline pricing.
Its Aug. 30 report chose to characterize an unjustified mark-up of 13-cents-a-litre in southern B.C. and six cents in the North as “unexplained”.
Having left open the possibility that an explanation might be forthcoming given more time, the commission recommended the panel’s work be extended into the fall.
The New Democrats granted the extension, the industry had a go at explaining itself, and the commission assessed all of the feedback in a supplementary report released Tuesday.
But despite the industry’s efforts, panel chair David Morton and the other two commissioners stood their ground for the most part.
They did hedge by translating the markup from a single number to a range: “The unexplained difference could potentially range from 10 cents per litre to the originally reported 13 cents.”
The commission reckons “every additional one-cent margin represents $37 million more … paid annually by B.C. motorists.”
Otherwise, the panel continued to fault the industry for functioning as more like a closed oligopoly, rather than an open competitive market.
The commissioners also stuck by the “tail-wags-dog” finding that the spot market in Seattle was setting prices in Metro Vancouver, despite Washington state accounting for only five per cent of the gasoline supplied to B.C.
As to why the industry failed to make its case, the panel noted the lack of coordination and outright contradictions in the submissions.
“There is validity to considering some of the factors brought forward by the interveners. However, the evidence is either inconclusive or conflicting, making it impossible to determine an appropriate quantum for an adjustment, if any.”
Only a handful of industry players even bothered to take advantage of the opportunity to respond to the earlier findings: Parkland Fuel, Imperial Oil, Suncor Energy, 7-Eleven Canada, and Advanced Biofuels.
The panel also took note of the industry’s collective lack of response to public concerns about unexplained fluctuations in gasoline prices and apparent overcharging.
The earlier report had included a summary of submissions from the public, pointing to “a growing frustration among B.C. consumers with what they see at their local service stations.”
However, “none of the interveners addressed these comments in evidence or argument during the comment period of this Inquiry.”
The panel provided a second opportunity during the more recent period, again posting comments as they came in. Many were from a single community, Powell River, complaining about a fixed gap in prices with Metro Vancouver.
“Metro Vancouver retail pricing is characterized by price cycling which has led to high volatility, a source of frustration to many. By contrast, residents of Powell River complain that prices have been static at or around 159.9 cents per litre.”
But as in the earlier round, the response from industry to the Powell River price gap was non-existent.
“Although we note there may be a good explanation to justify it,” wrote the panel, “it is unfortunate none of the interveners chose to respond to any of these concerns raised in the letters of comment or at least acknowledge them.”
In passing, the commission did cite the predicament of consumers in Powell River to demolish the industry arguments that higher land prices were a major driver of gasoline prices in B.C.
“Ironically, the panel observes that there has been a great number of letters of comment with respect to the high price of gasoline in Powell River relative to the Metro Vancouver. Given the difference in land values between these two areas it might be expected this would be reflected in a lower gasoline price.”
Building on its earlier work, the panel underscored the frustration and confusion experienced by the public in a world of wild and unexplained fluctuations in prices.
In one instance, “prices dropped by 10 to 12 cents at an escalator pace and returned to the starting price, all within a single day.
“Depending upon the timing of the purchase an individual customer could be a ‘winner’ and save money or a ‘loser’ and pay a higher price,” concluded the panel. “This in effect puts the customer in the position of being a trader in a commodity market.”
The industry’s response to all this was to bombard the commission with technicalities — Parkland economist Henry Kahwaty was the hands-down winner of the impenetrability sweepstakes — while ignoring a driving public that feels both gouged and bamboozled at the pump.
The industry reps likewise tried to hoodwink the commission, according to panel chair Morton, who is also CEO of the BCUC itself.
“The oil companies that made those arguments were not able to provide any single piece of evidence that would persuade us that was the case,” he told Rob Shaw of The Vancouver Sun on Tuesday.
“There was no concrete evidence provided. At the end of the day, we said we really don’t have anything definitive, so we’re not going to back off this 13 cent number.”
By responding with such high-handed disregard for the opportunity provided by the commission, the industry confirmed both its own arrogance and the need for some sort of check on predatory gasoline pricing. Over to you, Premier Horgan.