Martyn Brown: How Trudeau and Horgan could cut B.C. gas prices
Another day, another depressing headline about British Columbia’s sky-high gas prices.
Spoiler alert: there’s no substantive relief on the horizon. A happy coincidence, I’m sure, for those who would have B.C. motorists believe that all their gas pains would somehow magically be relieved through a bigger outflow pipe.
It is the great Canadian Con game, promulgated by Jason “The Punisher” Kenney, by Scott “I’m his Stooge” Moe, by Doug “Model B” Ford, and of course by their national leader, Andrew “Scheer folly”.
For Kenney’s Cons, the answer to B.C.’s gas agony is to release the pressure on the unseemly volumes of diluted sludge that are now being squeezed in and out of western Canada’s overburdened alimentary canal. Otherwise known as the Trans Mountain Pipeline (TMP).
Build the Trans Mountain Pipeline Expansion Project (TMEP) they say, and we will all feel so much better. Especially if we also scrap Canada’s carbon tax.
Not to worry, their Liberal dupe-in-chief wants you to know: help is on the way.
The Trudeau government is expected to reapprove the TMEP on June 18, or at least sometime before the October federal election.
“The need for it, and the national interest, is clear,” he said on April 30.
Not that he’s made up his mind, he wants the courts and Indigenous peoples to understand, closed as it was from the outset to those who warned him it was always a bad bet.
Just as soon as we “build that pipe” B.C.’s gas prices will fall, with that added capacity to ship Alberta’s refined fuels to our province.
Righhht … like Tony really put a tiger in your tank. Or like you could trust your car to the man who wore the star.
The Mad Men are still at it, with new myths for a bygone era that made a virtue of being oily.
Sorry, but I’m not buying it, as I argued in my last article in the Straight.
Today’s gas prices are no joke. They hurt. I get it.
What to do about the problem, out here on Canada’s left coast?
That is the subject of this extremely lengthy dissertation and its eight suggestions to help alleviate inordinate gas-price surges—intended only for long-readers with time to burn and an abiding interest to match.
Rest assured, premier John Horgan is not prepared to sit idly by.
Cheer up, British Columbia, he’s on the case—alternately calling on Alberta to build more refineries, demanding Ottawa to take some unspecified action, and now quietly negotiating for more pipeline space to send more Albertan gas B.C.’s way.
Weeks ago, he asked his deputy Don Wright to look into the problem and recommend solutions.
And on May 7 he “requested” the B.C. Utilities Commission to “facilitate a fair, transparent and inclusive investigation so we will all have the information required to seek solutions to the high and wildly fluctuating price of gasoline”.
In the meantime, I suppose we should our console ourselves in the fact that even though B.C.’s gas prices are the highest in North America, they are still a “bargain” by some world standards.
At least 35 countries now pay over two bucks a litre. Ouch.
Even at $169.9¢ per litre in Metro Vancouver, or 161.9¢ in Greater Victoria, our gas prices are “cheap” compared to the 2.65¢ per litre that Norwegians are now paying.
Ironic, considering that oil-rich Norway also leads the world in per capita electric vehicle usage, with every second car sold now being electric.
With over 35 countries paying more than $2 a litre for gas, we still have a ways to go to really “feel the burn.”
Then again, at least 110 countries also now pay less per litre for gasoline than we now do in British Columbia.
The average price for Canada is a mere $1.48 a litre. It’s only $135.9 in Prince George.
OK, so that’s just made you more depressed, if you’re among the millions of “oil hostages” living down on B.C.’s south coast, in latte land.
After all, the polls suggest that 48 percent of Canadians are only $200 away from financial insolvency, including some 26 percent who don’t make enough to even cover their monthly bills and debt obligations.
With the cost of an average weekly fill-up soaring by maybe $30 over the last few months, for an added monthly gas bite of $120, that pressure got a little too real, too quick.
And with the usual Canada Day long weekend price bump now in sight, along with TransLink’s scheduled 1.5 cent per litre fuel-tax hike on July 1, the cost of driving could get even more expensive.
Check that: it could get brutally expensive.
Particularly, if Alberta premier Jason Kenney makes good on his threat to “turn off the taps” in the unlikely event that B.C. does something new to piss him off.
There are measures that Trudeau and Horgan could both take to combat higher gas prices.
Killing the TMEP before it does any more damage would ultimately be the most positive step in that direction.
It is the only ethically prudent choice for the environment and for our planet. It is also the smartest course of action for taxpayers and for a more sustainable and diversified Canadian economy.
Which means that Trudeau will almost certainly go the opposite direction.
He sure seems hellbent on losing votes and seats to the NDP and Greens in B.C. and across Canada, in trying to salvage his Liberals’ weeny and waning support base in Alberta.
Breaking down our pump pains: a 60/40 private/public split
What accounts for our pain at the pumps?
Omnipresent GasBuddy.com analyst Dan McTeague is always quick to answer that question.
“McTeague said the cost of an average litre of gasoline in Vancouver breaks down to about 52 cents per litre for the oil, 33 cents for the U.S. refinery, four cents in wholesaler markup, about 12 cents in retailer margins, 52.5 cents in federal, provincial and municipal carbon taxes and 10 to 15 cents per litre due to B.C.’s low carbon fuel standard regulations.”
So, at $168.5/ litre, some 31 per cent is due to federal and provincial taxes.
Another 8.9 cent, max, is due to the hidden costs of B.C.’s renewable and low carbon fuel requirements, not to mention the federal government’s pending clean fuel standard.
Hopefully the BCUC review will better quantify that guesstimate.
As such, those two factors combined account for not quite 40 percent of every litre of gas, or 67.5 cents in total.
Except today’s regular gas prices have been as high as $1.72 a litre at some stations, which drops that portion attributable to taxes and low carbon fuel standards to 39 percent.
And that cost component hasn’t changed at all in the past year, other than a penny per litre carbon tax hike that didn’t even take effect until April 1, after gas prices had spiked.
In other words, the surging cost of gas is not due to the mostly static government-imposed portion of pump prices, significant as it certainly is.
It is, in fact, the other 60 percent of the current price of gas that wildly fluctuates, which has nothing whatsoever to do with government.
To address that problem, our governments need to regulate, mitigate, and educate.
They need to regulate the supply of both the oil products that flow through the federally owned TMP and also the prices that British Columbians pay at the pumps.
They need to mitigate B.C. motorists’ demand for those products and their reliance on that pipeline and on Alberta’s oil.
And they need to educate all taxpayers about the true causes of their pump pains and price pressures; about the true environmental, social, and economic costs and risks of escalating fossil fuel production and tarsands exports; and about their individual choices in switching to clean and renewable transportation alternatives.
Here then, are my eight suggestions towards that end.
- Trudeau should immediately vow to reject the TMEP if Kenney tries to make good on his threat to “turn of the taps”.
It is wholly unacceptable for Trudeau to contemplate a new pipeline to reward Alberta that will cost north of $9.3 billion to build, as long as its premier is holding a sword of Damocles over Canada’s existing publicly owned pipeline and over British Columbians’ heads.
It is also unacceptable for the prime minister to be standing on the sidelines in the constitutional court battle over Bill 12. That legislation represents a serious threat to all Canadians, not just to British Columbians.
Regardless of its decision on the TMEP, Canada has a national interest in having that law declared unconstitutional and of no force and effect.
Trudeau should immediately stipulate that Bill 12 must be repealed as a precondition for any hope for the TMEP’s approval.
And he should ensure that Canada is a forceful intervenor in backing B.C.’s case to have that legislation struck down.
Obviously, if Kenney ever acted on his threat to “go nuclear” it would instantly create a constitutional crisis. And yes, B.C. gas prices would rapidly soar, if only for a few days until an injunction was granted.
It is a reality that the B.C. government’s resident expert Michael Rensing reinforced in his affidavit filed in support David Eby’s statement of claim to have Bill 12 declared unconstitutional.
Hence B.C.’s argument for the Alberta Court of Queen’s Bench to grant an injunction, while that case unfolds as it will. Ottawa must support that application, too.
Some pundits have tried to suggest that Rensing’s submission implicitly proves that the TMEP will lower B.C. gas prices by increasing pipeline capacity for refined fuels.
It only asserts that drastically reducing or stopping the existing amount of refined fuels and light oil flowing through the Trans Mountain Pipeline (TMP) would very quickly cause a significant spike in gas prices. Because those Albertan oil products directly or indirectly account for 80 percent of the gasoline and diesel used in B.C.
It is self-evident that replacing them wouldn’t be easy, inexpensive, or even possible in short order.
Trudeau has all the cards in his hands to force Kenney’s hand in repealing Bill 12.
If Trudeau has even a fraction of his father’s courage, he will use his constitutional power that P.E.T. strengthened, ironically, in response to the crisis he created through the National Energy Program.
You want a new pipeline to tidewater, Alberta?
Kill Bill 12 at once and stop the bluster, Trudeau must insist, as but one nonnegotiable precondition for even considering its re-approval.
Although, to be clear, I’d rather he simply rejected the project and opted to fight it out in court if necessary, because Bill 12 is clearly unconstitutional and Kenney is bound to lose.
- As the owner of the TMP and the one who writes the rules for the NEB, the federal government should give priority to refined fuels and light oil destined for meeting Canada’s domestic transportation needs.
Canada now owns the Trans Mountain pipeline and its related assets.
It should empower itself to determine what types and volumes of oil products will flow through it, and retain that power, if it should ever find a suitable sucker-buyer for that pipeline and twinning project.
With or without the TMEP, Trudeau should act to administer the existing TMP to ensure that that pipeline serves its originally intended purpose.
Namely, to supply refined fuels to British Columbians and light oil feedstock to West Coast refineries dependent on those products. Of which there is only one remaining in B.C.: Burnaby’s 55,000 barrel per day Parkland refinery.
Two changes should be made in that regard by the Trudeau government.
First, it should immediately act to reallocate the TMP’s limited 300,000 bpd shipping capacity, to always reserve sufficient room for meeting B.C.’s estimated fuel needs.
Second, it should change the National Energy Board’s regulatory rules for apportionment as it applies to that legacy pipeline.
“Apportionment” refers to the amount of demand shippers place on the pipeline in excess of its available capacity.
As noted above, that pipeline space has been oversubscribed in recent years, with levels of apportionment reaching 40 percent in 2018.
Effectively, shipping space on the TMP has been increasingly reallocated to accommodate “nominated” volumes of heavy oils (diluted bitumen and synthetic crudes).
That has basically squeezed out space previously dedicated for refined products and light oils, because the oil producers’ growing demand for pipeline space has been to export tarsands oils.
The more pressure that poses to the Parkland refinery and to B.C. gas retailers, the more it also pressures gas prices.
That is the most salient “supply and demand” reality that has been at play in B.C., to the detriment of B.C. motorists.
Big Oil wants to end the “Alberta discount” on the relatively lower prices it receives for its heavy crudes versus the higher quality oils in global oil markets. Fine.
But those oil producers shouldn’t be allowed to do that by also effectively discounting British Columbians’ needs and interests.
It’s time to tackle the “B.C. price premium” that was consciously imposed on B.C. motorists, by dint of an unregulated gas-pricing market and a previously privately owned pipeline, without the federal or provincial governments lifting a hand to remedy it.
The federal government could ease the price pressure related to that problem in a heartbeat.
It could prescribe a new method for determining the NEB’s allowable rules for apportionments in the now publicly owned TMP, in setting its monthly tariffs.
No apportionment should be legally permissible for any nominations to ship (a) light oils that can be processed in the Parkland refinery, or (b) refined fuels that B.C.’s local retail markets demand.
If the TMEP is approved, a slight surplus capacity should be statutorily reserved in the TMP to ensure that Canada’s domestic motor fuel needs in British Columbia are never short-changed.
Including during those entirely predictable gas squeezes caused by the West Coast refineries’ seasonal maintenance, in also switching to summer and winter blends, or during pipeline shut-downs or curtailments on the U.S. Pacific coast.
Ottawa should also aggressively act to increase Albertan oil shippers’ contracted commitments for shipments of refined and locally refinable products.
It might start with the 13 major oil companies that are already contractually committed to long-term “take or pay” shipping agreements via the TMEP.
If they want that new pipeline, they should contractually commit to helping B.C. meet its fuel needs through the TMP, to the extent they produce and ship those relevant products.
To reiterate the point I made in my previous article, only 18 percent—or 54,000 barrels per day of the TMP’s 300,000 bpd capacity—is currently subject to long-term shipping contracts.
By contrast, 80 percent of the proposed TMEP capacity is already contractually committed and 100 percent of that new pipe will be reserved for diluted bitumen and other tarsands crudes.
There ought to be some sort of quid pro quo that apportions more total pipeline space to those producers who contractually commit to meeting B.C.’s demands for gasoline, diesel, and jet fuel as the priority it should be.
Notwithstanding how that might slightly cut into the oil industry’s already massive margins.
If we want to keep the prices down on B.C. gas, the federal government needs to ensure that there is always more than enough capacity in the expanded pipeline—and suitable product available to flow through it—to supply B.C.’s gas demands, independent of Washington state refineries.
- John Horgan should require the B.C. Utilities Commission to regulate gas pricing
With or without the TMEP, this one’s a no-brainer.
John Horgan should amend B.C.’s Utilities Commission Act to require that independent and quasi-judicial body to regulate gasoline and diesel pricing. As it does with electricity rates, natural gas rates, intra-provincial pipelines, and ICBC premiums.
Regulating gas prices, as the Atlantic provinces do, would increase transparency, fairness, and consumer protection.
British Columbians’ past experience with spiking gas prices cannot be explained by taxes or low carbon fuel standards. The need for regulation is already patently clear.
The oil companies are uniquely positioned to take advantage of B.C.’s vulnerable consumers, who are all dependent on their products and services in the absence of any material competition.
The laws of supply and demand don’t work so well when they can be easily manipulated for higher profit by energy producers, wholesalers, and retailers in such a highly concentrated supply market.
Right now, they hold all the power to fundamentally dictate what B.C. motorists are ultimately obliged to pay.
That must change.
Natural Resources Canada is not a big fan of regulating gasoline prices. It asserts that “this approach has not resulted in lowered prices for consumers in these jurisdictions. Provincial price regulations are generally introduced to provide more stable prices.”
I expect that at least the four Atlantic provinces that all now regulate their gas markets might dispute the NEB’s claim that regulation has not helped to minimize gas prices.
If you want to read about what that entails and how each of those province do it, here are the links for the relevant regulators in Nova Scotia, New Brunswick, P.E.I, and Newfoundland and Labrador.
Essentially, all of those provinces set a price “ceiling” (i.e. maximum per litre gas price), that is calculated either weekly or biweekly.
Nova Scotia and Quebec also set a price “floor” (i.e. minimum price of gas). That’s aimed at preventing big gas retailers and box stores from undercutting smaller retailers with prices that are potentially below cost. Not a problem in B.C.
Nova Scotia also prescribes slightly different gas prices for different regions, which are intended to reflect their relative costs, especially for transportation.
Typically, all those provinces determine their citizens’ maximum gas prices by factoring in the benchmark price of oil, in cents per litre, and a maximum price in cents per litre for each element—the wholesale margin, retail margin, and delivery charges.
And, of course, they also add in the costs of their applicable federal and provincial taxes.
All of that is transparently calculated and published, to let everyone know how the price of their gasoline is fairly determined.
It ensures accountability for all of the key actors involved in influencing gas prices.
It minimizes and prevents price gouging at every level, be it from oil producers, refineries and wholesalers, or gas retailers.
It instills public confidence by giving those citizens some assurance that their government “has their back”.
And regardless of whether or not that results in lower prices, which I dare say most of those jurisdictions would argue it does, regulating those gas market tends to result in “more stable prices”. As the NEB acknowledges.
Greater stability in gas pricing is reason enough to regulate B.C.’s gas prices.
All of those benefits are presently lacking in B.C., because successive governments have managed to convince themselves that regulating gas prices “wasn’t necessary”.
They trusted the “free market” to regulate supply and demand, and also, gas prices.
How’s that working out for you, so far?
We have been royally screwed, I suggest, by federal and provincial governments that have been too gun-shy to do what they should in protecting the interests of increasingly vulnerable B.C. consumers at the pump.
That should change. Now.
John Horgan was right when he advocated for regulating gas prices back in his first few years in opposition.
He is wrong to agree now with Andy “CAPP” Wilkinson’s view that Horgan was wrong in taking that stance, over a decade ago.
And he sure would be wrong to take Andy CAPP’s word for it that “alleged price fixing by the petroleum companies” is “apparently not a real issue”, as he said in a recent CBC interview.
Regulate gas prices, Premier.
It is the single biggest step you can take to stabilize gas prices and to fight back on price gouging.
- Trudeau should commit to holding B.C. motorists “harmless” for the incremental shipping toll costs that will pay for building the TMEP.
As noted above, all oil shippers will be obliged to pay for the capital costs of the TMEP through higher toll charges. I suggest that could easily add 3-5 cents-a-litre to the cost of B.C. gas.
It is bad enough that British Columbians will be saddled with the environmental and economic risks of building and operating the TMEP, and of turning Metro Vancouver into a major export terminal for diluted bitumen.
They should not have to pay even more at the pumps to facilitate those risks and costs through higher shipping tolls.
The Trudeau government should work with the B.C. Utilities Commission and the Horgan government to calculate what the incremental toll-related costs will be for B.C. motorists.
And those costs should be either subtracted from newly regulated retail gas prices, or they should be offset through some other means for British Columbians.
The government could do that in a number of ways.
It could legislate comparatively cheaper “heritage contract” rates on refined fuel and light oil shipped through the existing TMP.
That would be similar to the mechanism that was enshrined in the Campbell government’s Clean Energy Act .
That Act ensured that the power from BC Hydro’s heritage assets—its dams and transmission line—would not be misappropriated to effectively subsidize new electricity exports.
“The Act clearly separates exports and ensures that ratepayers are not subject to the risk of long-term export sales and also ensures benefits from export revenues flow to ratepayers and taxpayers,” B.C. Hydro explained.
“The B.C. Utilities Commission is required to ensure that any expenditure associated with long- term exports are not included in domestic rates.”
The federal government could commit that B.C. motorists will be similarly protected from increased toll-related charges aimed at facilitating oil exports.
Note that I am not even talking about the added premium that would still apply to B.C. gas from the higher oil prices that the oil shippers would receive from selling their products to new export markets. Closing that “Alberta discount” is the main point of the TMEP and it, too, will result in higher gas prices if those oil companies are “successful” in driving up the value of their oils.
If the province opted to regulate B.C. gas prices, it could be part of the BCUC’s biweekly calculations in “netting out” toll-related charges on refined products directly or indirectly shipped through the TMP—a now publicly owned Canadian “heritage asset”.
That would obviously mean that the shippers who opt to use that existing pipeline and the added capacity newly available from the TMEP would have to pay a little more for transporting their oil exports—so as to not lay those added new capital financing costs onto B.C. motorists’ backs.
Or, it would involve a federal subsidy to offset those added toll costs for B.C. consumers.
That could be easily enough accommodated if Trudeau only kept its broken election promise to “phase out subsidies for the fossil fuel industry”.
Back in 2015, the Liberals themselves suggested those subsidies probably cost at least $1 billion a year in the federal government’s tax framework.
Canada ranks dead last in the G7 on that scorecard.
Even before the $4.5-billion Trans Mountain purchase, Canadian taxpayers were being horribly gouged to subsidize Big Oil.
As one recent study revealed, “every woman, man, and child in Canada also ‘donates’ around $100 (US$77) to profitable and often foreign-owned oil and gas companies. That donation, in the form of federal and provincial subsidies, amounted to an average $3.67 billion (US$2.84 billion) annually in 2015 and 2016. That makes Canadians the most generous among the G7 nations…”
Another option to offset the incremental impacts of higher pipeline shipping tolls for B.C. families might be to essentially refund those price premiums directly to B.C. taxpayers.
The federal government could redistribute those unfair added hidden tolls charges on B.C. motorists through tax credits or cash rebates.
Just as northerners get special tax benefits, those credits or rebates might be made exclusively available to B.C. residents living in the regions dependent on that pipeline.
Or they might be even further targeted to those whose taxable income is below is a prescribed threshold, say $150,000 a year.
That might be accomplished by financing the TMEP over a longer time frame, if the government cannot be dissuaded from approving that project in the first place, which would of course altogether avoid those higher toll charges.
Whatever mechanism is chosen, the goal would be clear: to ensure that none of those extra toll costs are priced into the refined and locally refinable oil products that flow through the TMP and passed along to B.C. motorists through higher gas prices.
- The Trudeau government could remove the GST on gasoline and diesel in B.C., if the Horgan government opted to regulate gas prices.
Of all the taxes applicable to gasoline and diesel in B.C., I submit, the most objectionable is the GST.
Why? Because it is a tax on a tax.
Currently, the GST adds about eight cents a litre to motorists’ gas bills in Metro Vancouver.
Trudeau could earn his party a lot of political support by eliminating that tax on tax, not just in B.C., but across Canada.
It would certainly make his federal carbon tax more palatable in the provinces where it applies, which would go a long way toward building public buy-in for his government’s commitments to carbon pricing.
I haven’t a clue what it would cost to remove the GST on gasoline, in recognition of the applicable carbon taxes on fuel.
But again, it could probably be partially offset by cutting out subsidies to Big Oil—and perhaps also by extending the carbon tax to apply to fuel imports that presently flow into Canada.
It is simply not fair that the carbon tax does not apply to those oil imports. Fixing that could go a long way to offsetting the cost of eliminating the GST on gasoline and diesel.
Moreover, if the NDP moved to regulate gas prices in B.C., the BCUC could ensure that that tax break was indeed passed along to B.C. motorists at the pump.
It could ensure that the oil companies would not simply reverse that tax break by unduly raising gas prices.
I won’t hold my breath waiting for any federal party to embrace that idea, which would be far more popular than Scheer’s promise to scrap the GST on home heating.
- The NDP could simplify the fuel tax regime and cut gas prices in the process, by gradually replacing all fuel taxes with a single, higher carbon tax.
Vancouver and Victoria do have the highest gas prices in North America, in part because they have the highest fuel taxes.
Together, those taxes generate about $1 billion in revenue this year, as compared to $1.7 billion from the carbon tax. [See page 99 in the 2019 Budget.]
And that doesn’t even include the 10 cents-a-litre federal excise tax, or the 5 percent GST that is charged on top of it all—the gas, the margins and those other taxes.
British Columbians generally pay much more than Albertans, in part, because they have elected successive governments that chose to fund transportation and public transit with gas taxes.
We aren’t running massive deficits, like Alberta has largely wished upon itself, because of its refusal to impose a provincial sales tax like every other province has been obliged to do.
Jason Kenney now seems bent on balancing his province’s budgets, while also slashing corporate income taxes and cutting the provincial carbon tax. Good luck with that.
In B.C., we aren’t sticking our heads in the sand and hoping for money to fall from the sky to fund our citizens’ needs, as Alberta has done through its over-reliance on oil sands revenues.
News flash: they will never again rain down as they used to.
Little known fact: British Columbians outside of Metro Vancouver and Greater Victoria actually only pay 4 cents per litre more than Albertans do in provincial gasoline tax. The combined provincial tax for fuel taxes and carbon tax is 23.39 cents per litre in B.C., versus 19.73 cents per litre in Alberta.
But motorists in Metro Vancouver pay 34.39 cents a litre in provincial and regional gas tax—or 14.66 cents per litre more than Albertans. Yet the price of gasoline today in Metro Vancouver hit $1.72 a litre in some places last week, versus around $1.23 a litre in Calgary—a difference of 49 cents per litre, of which, less than 15 cents is accounted for by the difference in tax. It’s outrageous.
So, spare me the sob story of “tax strapped” Albertans who have also rejected fuel tax hikes, and now also carbon taxes, to help finance their growing transportation infrastructure needs.
Having said that, B.C. might consider ways to streamline and simplify its provincial fuel tax burden.
Not by backing away from the carbon tax, but by doubling down on carbon pricing as a means for tax shifting, phased in over the coming years.
Bear with me. This idea’s a biggie.
Fact is, to achieve its purpose, the carbon tax is going to have to continue to rise in all provinces after it reaches the federal government’s prescribed minimum threshold of $50 per tonne by 2022. Unless, of course, Scheer’s Conservatives form the government and kill it altogether.
In any event, B.C.’s carbon tax will likely go up after that threshold is reached in 2021.
We shouldn’t kid ourselves—that won’t be politically popular. The easiest course for any future government will be to follow former B.C. premier Christy Clark’s bad example and put the carbon tax on ice. We can’t let that happen.
The carbon tax is most visible and politically painful at the pumps. A phased approach to supplanting other gas taxes as the carbon tax goes up might help to preserve its political viability.
That would be far better and more ecologically responsible than the more politically expedient alternative of simply exempting motor fuels from the carbon tax.
But that, too, could be considered, to the extent that every cent of those existing provincial and federal fuel taxes is a crude form of carbon tax.
Trouble is, those other non-carbon fuel taxes are imposed on the fluids in motor fuels—not on those fluids’ carbon emissions.
As such, they also tax the components of gasoline and diesel that are subject to B.C.’s renewable and low carbon fuel standards, which McTeague estimated likely cost somewhere around 10 to 15 cents a litre.
That’s tax on top of the indirect hidden tax that is effectively embedded in those renewable and low carbon fuel standards that are serving to reduce and eliminate carbon emissions.
Those indiscriminate fuel taxes actually tax the added costs of reducing and eliminating carbon emissions in gasoline at the same rate as the rest of the stuff that comprises it, which is creating the carbon emissions we should be trying to eliminate.
It makes no sense.
Those multiple taxes on the same motor fuel products serve to make gas more expensive, which will encourage people to switch to electric vehicles in the not-too-distant future, just like the carbon tax is designed to do.
But they also make the carbon tax an easy political target as the incremental source of motorists’ gas pains, when really, most of their fuel taxes are not due to carbon tax.
In fact, TransLink’s regional fuel tax has gone up by 5 cents a litre in Metro Vancouver in recent years. That regional fuel tax will rise from 17 cents a litre to 18.5 cents a litre on July 1.
That’s a 6.5 cents-per-litre tax hike for that fuel tax since 2012, as compared to the nearly 9 cents a litre accounted for by the carbon tax since its introduction in 2008.
We could take an entirely different approach.
We could gradually phase out all of the various fuel taxes that are now applicable on gasoline and diesel and replace them with an incrementally increased carbon tax.
The Horgan government could consider gradually replacing the Dedicated Motor Fuel Tax and the Provincial Motor Fuel tax with a single carbon tax that is proportionately high enough to recoup that lost revenue.
It could effectively lower Metro Vancouver’s TransLink tax and Greater Victoria’s 5.5 cents per litre B.C. Transit tax with a new regional carbon tax surcharge that raises the same revenue from making it applicable to a broader range of fossil fuel products.
That tax shift would accomplish a few things.
First, it would simplify and rationalize B.C.’s fuel tax system.
Second, it would base all fuel taxes on carbon emissions, instead of taxing all the liquids within those fuels and penalizing emissions-reductions efforts, as the other fuel taxes do.
Third, it would actually decrease overall gas taxes, at least initially.
It would do that by expanding the tax base to all fossil fuel emissions covered by the carbon tax, instead of disproportionately taxing one form of fossil fuel—gasoline—including its renewable and low-carbon content.
That would still give motorists ample incentive to switch to electric vehicles as their household finances allow, as world oil prices also go up and the price of gas continues to rise as it certainly will in coming years. But it wouldn’t unfairly tax gasoline in serving that end.
Fourth, it would give those communities a “slice of the carbon tax pie” that they can regionally control, within parameters, to fund their growing public transit needs. Without relying exclusively on ever higher gas taxes that place all the pressure on motor fuel prices, or on higher property taxes.
Finally, it might help to politically “save” the carbon tax from those who want to kill carbon pricing altogether.
It would be more in line with B.C.’s original idea of a “revenue-neutral” carbon tax that uses incremental carbon tax revenues to finance new tax cuts, although I am not suggesting a return to revenue neutrality, as such.
In this case, some of that incremental carbon tax revenue from higher carbon tax rates would be applied to cutting and effectively replacing the existing fuel taxes on liquids (gasoline and diesel) with carbon taxes on emissions.
If gradually adopted in tandem with newly regulating gas prices, motorists might come to appreciate that the rising carbon tax is not disproportionately hurting them at the pumps. In contrast to the current fuel tax system, which simply imposes carbon taxes on top of those other fuel taxes that now account for the overwhelming lion’s share of gas taxes.
Rather, some of that revenue would be used to eliminate those other fuel taxes in better targeting carbon emissions from all fossil fuels.
The federal government might also consider that model as a means to gradually replace its 10 percent federal excise tax and its GST on motor fuels with a single higher carbon tax rate that is phased in over the next decade.
Which is to say, we might want to consider having differential federal and provincial carbon tax rates—a provincial carbon tax rate and a federal carbon tax rate that are both applicable to the same carbon-emitting sources.
That might be especially pertinent for the provinces that aren’t “playing ball” with Ottawa, where the federal carbon tax applies.
That tax shift would, of course, result in a modest increase in carbon taxes for home heating and for the biggest industrial polluters, especially Big Oil.
That is, it would if our governments acted to phase out their subsidies to the oil and gas industry.
The Horgan government is actually increasing provincial subsidies to the fossil fuel industry, in its rush to embrace LNG and massive increases in natural gas production.
To get a sense of that problem and what we could save B.C. taxpayers by stopping those subsidies for Big Oil, read Marc Lee’s excellent new analysis on behalf of the Canadian Centre for Policy Alternatives.
The government could choose to offset the added price pressure of a higher carbon tax for B.C.’s lower-income families with even higher annual rebates than it is currently offering and planning.
Or it might do that through new forms of income-sensitive rates for natural gas and propane home heating, under the current BCUC rate-setting process.
One way to help finance that would be to ensure that the natural gas and LNG industry pays the same carbon tax rate as all other British Columbians must.
Instead, the government is offering to grant those wealthy companies an effective carbon tax rate of $30 a tonne, while the rest of us will be paying a rate of at least $50 a tonne by 2021.
It is offering to subsidize Big Oil’s emissions cost savings by giving its largest companies—including several state-owned behemoths—a discount rate on their carbon tax to help lower their costs of meeting lower carbon emissions standards. That’s wrong.
In a future article I will have much more to say about the carbon tax and the politics of regulation versus more visible forms of carbon pricing. For it is going to be a key issue, if not the pivotal issue in the upcoming federal election campaign.
- John Horgan could fight back with a public information campaign that lets British Columbians know why gas prices are really so high.
I refer you the lengthy article I wrote in the Straight about the need to counter Jason Kenney’s $30-million public relations “war chest” with a concerted campaign to let Canadians know what’s really at stake with the TMEP.
Time to fight fire with more fire, I argued, in winning the war on climate action.
Time to give Canadians the information they need to fully come to grips with the costs of trying to offset Canada’s intentional increases in fossil fuel emissions, instead of acting to reduce them.
The B.C. government could do that with a two-pronged strategy.
One approach would be to directly lead that initiative through a government-funded public information campaign, as Kenney plans to initiate.
A second and complementary approach would be to fund the environmental organizations that Kenney is targeting and effectively trying to intimidate with efforts to “out” their “foreign funders”. As if much or most of Big Oil’s money doesn’t come from other countries.
We should be helping those organizations to more aggressively communicate arguments, insights, and research efforts that do so much good for our province and country. We should be supporting their counter-efforts to also out Big Oil in ways that government would never dare to do itself, for obvious reasons.
A big part of that two-pronged effort could be aimed at informing British Columbians about the cost components of their gasoline and what accounts for rapid price surges.
British Columbians’ anger about rapidly rising gas prices needs to be refocused on what and who is really causing their suddenly intense pain at the pumps.
Namely, on the oil companies, refineries and gas retailers—and also, on the federal government, if it refuses to act on some of the measures I have suggested above.
To be cheeky, Horgan could take a page out of Ontario premier Doug Ford’s playbook and flip it on its head.
He could legally require gas stations to put stickers on gas pumps showing the per litre base price of the oil in their holding tanks, the cost of refining margins, their own retailer mark-up, and the breakdown of federal and provincial taxes.
Each time the BCUC sets its new gas price rates, on a weekly or biweekly basis, those stickers could get slapped on anew. Or maybe printed cardboard signs on top of the pumps would suffice, whatever is easiest and least costly.
The gas retailers might also be obliged to tack up standardized posters, informed and designed by the Pacific Institute for Climate Solutions, or some such authority, to cite and illustrate key facts on the estimated growing costs of fossil fuel emissions that flow from every litre of regular gas burned in B.C.
Now that level of transparency would be a real public service, in my humble opinion.
- Horgan could expedite B.C.’s shift to electric vehicles (EVs) by regulating ride-sharing companies.
In the long run, the best solution to runaway gas prices is to drive our entire economy away from internal combustion engines powered by fossil fuels.
That is why B.C.’s GreeNDP alliance is charging forward with the Horgan government’s environmentally forward-looking new Zero-Emission Vehicle Act.
It will require at least 10 percent of new light-duty motor vehicles to have zero emissions by 2025, rising to 30 percent by 2030. It will outlaw the sale of any non-zero emission vehicles by January 1, 2040.
You want to get really serious about expediting the shift toward electric vehicles that will take a real bite out of vehicle emissions?
Here’s an idea: mandate that EVs will be the only legally allowable ride-sharing vehicles by 2021—the year of the next scheduled provincial election.
The NDP government has assured us that ride-sharing will be finally a reality this fall. Yahoo.
We should capitalize on that opportunity to reduce carbon and particulate emissions by making ride-hailing and taxi services B.C.’s leading edge in expediting EVs.
The cab industry in Metro Vancouver and Greater Victoria did that with hybrids like no other city in North America. It made that shift because it made so much sense, on so many levels.
“Going electric” could be even more beneficial for British Columbians, the faster the better.
But that won’t happen without a significant regulatory push from government, backed by even greater public investments.
I suggest we should start with telling the ride-hailing services that the “price of admission” into our transportation markets and road networks is to supply that demand with electric vehicles.
The province should double its currently planned provincial investment in fast-charging stations.
It should work with other governments and private landowners to provide many more suitable public sites for Uber, Lyft and other ride-hailing companies to compound those investments.
We need parking-lot size commitments to that end—at ground level, above ground and below ground—if we are to seriously expect the volumes of EVs that Horgan’s new law mandates.
Little “one-offs” for increasing vehicle charging capacity are fine and dandy, but on their own, they won’t cut it.
Especially given how long it takes to recharge those car batteries and the competition for those limited charging spots that is already becoming a serious impediment for EV owners.
Gas stations should be legally required to install one or two fast charging units by 2021, through a process also overseen by the BCUC, which should also regulate vehicle recharging prices.
We should act now to prevent future electric “fill-up” rate-gouging as EVs supplant gas-powered vehicles.
Public funding for assisting and expediting the installation of home-charging stations through programs like BC SCRAP-IT’s “zapbc” initiative should be greatly increased. This could be funded by those higher carbon taxes I suggested above—and/or by cutting provincial subsidies to Big Oil.
The NDP is certainly on the right track with its zero-emission vehicles vision.
But the level of government funding to encourage it and the regulatory pushes that are required to make it happen as soon as possible are still insufficient.
If we want to rapidly ween B.C. off of its dependency on Alberta’s oil and on Canada’s federally controlled pipelines, we need to move Heaven and Earth to electrify B.C. roads—in Metro Vancouver especially.
If we do that, it will save B.C. motorists bundles in future gas bills that are only likely to get harder to bear as time marches on.
Trudeau should reject the TMEP, cut Canadians losses, and save us all from the costs it stands to impose.
Few Canadians really anticipate he won’t reapprove that project, given his unwavering commitment to see it through; but naIve hope springs eternal until it’s officially crushed.
There’s a reason he got “Conned” into buying Big Oil’s ultimate Canadian pipe dream and bought Kinder Morgan’s “black elephant” with $4.5 billion in taxpayers’ money.
His brains are no match for his beauty.
The economic math behind the National Energy Board’s review and reconsideration report wasn’t just suspect: it added up to gross negligence.
The NEB’s pitifully inadequate economic rationale for twice approving the TMEP is almost entirely reliant on a single analysis commissioned by Kinder Morgan.
One that was riddled with dubious assumptions and further compromised by its reliance on fallacious forecasts provided by the Canadian Association of Petroleum Producers.
The NEB’s economic analysis either vindicates the proponents’ contention that the TMEP will increase Canada’s “garbage crude” prices, which I argued in my previous article will also increase B.C. gas prices.
Or, it indirectly supports the counterclaim that the TMEP will actually further reduce the price for Alberta’s oil, thereby making the project even more uneconomic.
If that happens, it will require no end of government subsidies to keep Alberta’s oil producers drilling and digging out their discounted dirty muck.
Either way, we lose. And we will pay for it at the pumps and in so many other ways, as I have repeatedly argued in the Straight, and will again.
But that is a topic for another day.
When all is said and done, the TMEP will only add up to one thing: a multiplication of divisions that are all negative for Canada.
Best to stop it now, before any more damage is done.
Cancelling the TMEP would be the best thing we could do, for British Columbian, for most Canadians, and for the world.
But failing that, hopefully, I’ve at least given those handful of you who read this magnum opus new food for thought.
I thank you for your reading time, interest and patience.