Gas price review finds unexplained difference of 13 cents per litre, costing B.C. consumers $490 million per year

    1 of 2 2 of 2

      Gasoline prices have shot up across the Lower Mainland heading into the Labour Day weekend.

      Coincidentally, this comes at the same time as a provincial inquiry has found serious anomalies in gas prices between southern B.C. and a cost comparator in the Pacific Northwest.

      In a new report, the B.C. Utilities Commission concluded that there's "a significant unexplained difference of approximately 13 cents per litre in wholesale gasoline prices".

      "The wholesale market for gasoline in B.C. is not truly competitive with high market concentration levels, high barriers to entry, and their ability to influence prices," the report states. "Retail market prices can also be controlled by five refiner-marketers."

      The authors—three BCUC commissioners—concluded that B.C. consumers paid about $490 million per year more than they otherwise would have paid.

      "We cannot find a specific trigger in 2015 that would explain the beginning of this disconnect," the report states. "While there was a change in the Trans Mountain pipeline allocation methodology, its economic effect was muted until 2018."

      There was no disconnect between diesel prices in B.C. and the rest of Canada.

      The BCUC also found no evidence to suggest collusion among retailers of gasoline products. Nor did the BCUC find that there's any evidence of "cartel behaviour".

      "Regulation could potentially reduce the wholesale and/or retail margins to what is earned in comparable jurisdictions and reduce price volatility," the report concludes. "However, further investigation should be done to determine if such an approach would be of benefit to British Columbia consumers."

      The BCUC has invited inquiry participants to provide comments over the next month to supply any additional evidence.

      Parkland's refinery in Burnaby is the only facility of its kind in the Lower Mainland.
      Parkland

      Parkland, which owns Metro Vancouver's only refinery, reported record second-quarter results this month, with net earnings of $105 million from April through June.

      The corporation told the inquiry that "competitive market forces are called the 'Invisible Hand' for good reason—the price is determined by price signals that may not be readily apparent to an observer".

      But the BCUC commissioners concluded that this did not explain why there was a significant difference in wholesale prices in southern B.C. compared to the cost in Washington state.

      "Therefore, it appears that the 'invisible hand' of an oligopoly may actually nudge prices in a way that is biased upward," the BCUC report states. "In addition, we find that retail margins are higher than the rest of Canada with no clear explanation for the difference."

      Prince Edward Island, Quebec, Newfoundland and Labrador, New Brunswick, and Nova Scotia all regulate maximum retail gasoline prices.

      Last year, B.C. Liberal Leader Andrew Wilkinson criticized the NDP government for instructing the BCUC to conduct a review.

      "It is deeply troubling that Mr. Wilkinson seems more concerned about helping oil companies than B.C. consumers," Jobs, Trade and Technology Minister Bruce Ralston said in an NDP caucus news release. "Our primary concern as B.C. New Democrats is bringing fairness and transparency to B.C. motorists.

      Comments