When pump politics backfire

There is a perception by some in Ontario that gasoline marketers are “greedy Big Oil,” racketeers who relish increasing gasoline prices before long weekends or at other opportunistic times, pocketing the surplus. This notion of toying with consumer dollars for profit also seems to play well politically, and can be seen in the Ontario NDP’s latest private members’ bill proposing to regulate gasoline pricing.

This perception, quite simply, is false and feeds the inaccurate portrayal of the nation’s gasoline marketing sector.

According to Kent Group Ltd., which recently published a report entitled “Understanding Retail Transportation Fuel Pricing in Ontario,” non-refiner marketers represented 70 per cent of Ontario’s retail sites in 2016, and 78 per cent of sites had their prices set by independent retailers. This means independent business owners and companies run the vast majority of our Canadian retail gasoline sites. It’s a competitive, freemarket landscape where profit margins, regardless of fluctuating gasoline prices at the pumps, remain slim.

In Ontario specifically, the largest single component of the price at the pump is taxes: 36.2 cents per litre on average last year. We saw the pump prices rise an Facts don’t support market regulation of gas prices, Jennifer Stewart writes. Prices in Newfoundland, which is regulated, are among the highest in the country. additional 4.3 cents per litre in Ontario as a direct result of the cap-and-trade program in 2016, an increase which consumers also pay tax on. The gross margin, from which retailers need to pay all operating costs and expenses, was just 8.2 cents per litre. Adjusted for inflation, marketing margins are model, the report found that markets with more volatility generally have lower retail margins. It also showed that Ontario’s 2016 retail margins and pump prices were rational given each market’s characteristics. In fact, the province’s markets showed competitive price behaviour, according to their