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B.C. gas prices: Inquiry finds 'unexplained' 13 cents/L difference in Metro Vancouver
Published Friday, August 30, 2019 8:58AM PDT Last Updated Friday, August 30, 2019 1:52PM PDT
A commission tasked with finding answers to why B.C. drivers pay so much more for gas has found that there is an unexplained 13 cents per litre price difference in Metro Vancouver gas prices from its Pacific Northwest comparator.
That difference in price can't be explained by economic factors and gas prices in Metro Vancouver are higher than would be expected under more competitive conditions, David Morton, chair and CEO of the B.C. Utilities Commission announced Friday.
Scroll down or tap here to read the full report.
There was no disconnect found in diesel prices between B.C. and the rest of the country, however.
In May, the BCUC was asked by Premier John Horgan to investigate what causes prices to climb as high as $1.70 per litre.
In northern B.C., Morton said there was an unexplained difference of six cents. Those unexplained differences across B.C. amount to a $500 million impact on the province.
Evidence found by the panel showed that retail margins in Vancouver outpaced the growth in retail margins in Western Canada starting in 2015. As a result, this showed that in recent years higher retail margins were skewed towards the south coast and specifically Vancouver.
"The panel found the wholesale market is not truly competitive," the report says. "Retail margins are higher than the rest of Canada with no clear explanation for the difference."
Looking ahead, the panel suggested investment in more refining capacity or a form of price regulation could help reduce wholesale and retail margins to limit price volatility. However that regulation would require more investigation, Morton said.
"There are uncertainties as to whether a regulator will do a better job than is currently being done by the oil companies," the report says, later adding that "a concern is that the 'reward' for less volatility may be much less than the 'cost' of regulation and low-cost providers to leave the market."
Additionally, the amount of storage oil companies had was not considered to be a factor in gas price changes, the BCUC's report suggested.
In terms of supply, the panel's report says "the B.C. government should ensure there is infrastructure for more refined product to flow to B.C."
The panel said it did not find any evidence of collusion between retail operators or an evidence of cartel behaviour.
"People feel like they're being ripped off when they fill up at the gas station. And they're right," said Bruce Ralston, minister of jobs, trade and technology in a statement after the report was released.
"Our government is concerned with the allocation of refined gasoline flowing into B.C., as well as the lack of transparency around how the price of gas is set. We are committed to bringing fairness and transparency to B.C."
When Horgan requested the review, he asked the panel to look at factors that may have been influencing prices over the last four years including looking at profit margins, retail mark-ups – including whether gouging is at play – and what the government could do to moderate spikes.
Also on the list are access to refineries, the amount of fuel in storage, pipeline capacity, market size and demand, distribution methods and seasonal variations, a media advisory from the BCUC said.
Does competition impact pricing? What are other jurisdictions doing to enhance transparency in how prices are set?
Both are questions the panel explored during its investigation.
In its report, the panel considered evidence filed by 11 registered interveners, including from all major companies that have refining and retail businesses in the province. It also received more than 70 letters of comment from members of the public and three reports prepared by two independent consultants.
Overall, the panel reviewed 3,207 pages of evidence and transcripts.
There were also four days of oral workshops for the panel to ask interveners questions. Interveners were also given the opportunity to ask questions on those independent reports.
The BCUC recommended a one-month comment period to allow for more information and evidence to be submitted.
"The exercise will ensure that the B.C. government is presented with the most comprehensive information available to make an informed decision," the report says.
Scroll through the full BCUC report below.