Gas re­port ig­nores taxes

The Prince George Citizen - - Opinion - KIRK LA­POINTE

In the hours be­fore the long week­end, where big news is brought to be buried, the Bri­tish Columbia Util­i­ties Com­mis­sion (BCUC) painted a frus­trat­ing pic­ture Fri­day of why our gas prices are North Amer­ica’s high­est. It will take much labour be­yond Labour Day for the cul­prits to get the smell from their prod­uct off their hands.

The com­mis­sion ran out of fin­gers to point, but the most dis­tress­ing and un­solve­able is a whole­sale mar­ket that “is not com­pet­i­tive,“an “oli­gop­oly” among four firms with “el­e­ments of a nat­u­ral mo­nop­oly.”

That said, that fac­tor does not equate with a fault.

Bar­ri­ers to en­try are for­mi­da­ble, re­fin­ing is pretty much at ca­pac­ity, and the re­port says it would take a lot of new in­fra­struc­ture to trans­port, re­ceive, store and dis­trib­ute mean­ing­fully to af­fect price.

One pre­sumed sus­pect ex­on­er­ated: while prices are “chore­ographed,” of­ten sev­eral times a day, and while this prop­erly frus­trates (and, I might add, even raises sus­pi­cion among) con­sumers, the com­mis­sion found “no ev­i­dence” of col­lu­sion or “car­tel be­hav­iour” among re­tail­ers.

There was one mys­tery the com­mis­sion could not solve: why there is a nearly 13-cent whole­sale price dif­fer­ence in Metro Van­cou­ver and the Pa­cific North­west?

Nei­ther “economic the­ory” nor “known fac­tors in the mar­ket” can ex­plain it.

It’s some sort of Ber­muda Tri­an­gle in which 13 cents mag­i­cally dis­ap­pears – ul­ti­mately that, and then some, from driv­ers.

There is also a non-mys­tery that the com­mis­sion could not solve: the ra­tio­nale and im­pact of gov­ern­ment taxes that to­tal more than one-third of the price at the pump.

It was for­bid­den by the Hor­gan gov­ern­ment to do so, even if it might be Ex­hibit A in a foren­sic ex­plo­ration, even if the BC NDP didn’t nec­es­sar­ily create the is­sue.

The com­mis­sion in­ves­ti­ga­tion was launched by the pre­mier in May, when prices flirted with $1.60 a litre in Metro Van­cou­ver.

The re­port re­it­er­ates what we hear every year about the phe­nom­e­non of late-spring prices.

It de­bunks the myth of the gas gouge.

It is sim­ply a mat­ter of sup­ply and de­mand, in which win­ter gaso­line is switched at the re­finer­ies to sum­mer gaso­line, and sum­mer gaso­line is in greater de­mand.

The com­mis­sion turns its at­ten­tion in the re­port to some pro­posed next steps and it is dif­fi­cult to find much hope, es­pe­cially any­thing short-term.

To start, we are driv­ing a lit­tle less and will drive even less in the years to come, so the de­mand for gaso­line will di­min­ish. But that’s hardly help­ful today, tomorrow or soon.

If in­dus­try and gov­ern­ment were to in­vest in greater re­fin­ing ca­pac­ity, the cu­mu­la­tive ben­e­fits of jobs, sup­ply se­cu­rity, sec­toral scale and ex­port op­tions could in turn drive down prices here.

The com­mis­sion says this has po­ten­tial, but again, this is not go­ing to hap­pen be­fore the Van­cou­ver Canucks are Stan­ley Cup con­tenders.

Be­sides, even if ter­mi­nal in­fra­struc­ture were added, the com­mis­sion con­cludes in­cum­bent firms could drop their whole­sale rack prices long enough “to pre­vent new par­tic­i­pants from en­ter­ing.”

Whole­sale price reg­u­la­tion is a pos­si­bil­ity, in that it could “smooth” the vari­a­tions in prices.

But in a very rare self-ef­fac­ing mo­ment for any gov­ern­ment in­sti­tu­tion, the com­mis­sion ac­tu­ally won­ders if “a reg­u­la­tor will do a bet­ter job than is cur­rently being done by the oil com­pa­nies.”

As for re­tail price reg­u­la­tion, well, the com­mis­sion is cooler to that idea.

Sure, it could re­duce re­tail mar­gins – some of them jus­ti­fi­able be­cause of the over­head that land value im­poses on re­tail­ers – and make them more in line with the rest of the coun­try.

But it could also drive away low­cost providers.

Thus, the com­mis­sion con­cludes, the “re­ward” might be less than the “cost” of reg­u­la­tion.

What we got Fri­day was the painful por­trait, some­what un­der­stand­able and some­what a rid­dle, with no ex­am­i­na­tion of gov­ern­ment taxes in the mix.

Prices have come down since the furore in May, so it is hard to be­lieve the province will view this as a pri­or­ity when it will need the rev­enue for its pro­gram spend­ing, for its cli­mate ac­tion strat­egy, and to deal with any economic head­winds.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.