Ottawa slow to act as gas prices rise

In the corporate head offices of Canada’s petroleum industry, when executives talk about the need to be “ competitive” on prices, what they really mean is they need to be charging the “ same” price as other companies for regular and premium gasoline sold at your local gas station. But when motorists talk about their desire to see “ competitive” prices, what they really mean is they want to see “ lower” prices.

This fundamental difference between how oilmen and drivers think about gas prices goes a long way in trying to explain why oil companies often seem to dismiss drivers’ gripes about pump prices that have hit as high as $ 1.30 a litre in Toronto and why consumers often dismiss oil company protestations that they are not gouging them at the pumps.

If they cannot agree on the definition of “ competition,” how are they ever going to agree on what is or is not “ gouging?” Such a question is taking on greater significance as politicians across Canada respond to consumer outrage about steep — and sudden — spikes in gas prices. The NDP wants the government to regulate gas prices. Conservatives want Ottawa to cut federal fuel taxes. Even some Liberals want to impose a temporary freeze on gas prices, saying they are not justified.

Oil company officials testified two weeks ago on Parliament Hill, arguing they have no control over the market price for oil. But they failed to explain why pump prices jump 20 per cent overnight when crude prices, affected by hurricanes and tight supplies, rise barely 5 per cent. And they failed to adequately explain why a hurricane along the Gulf of Mexico affects pump prices in Toronto and elsewhere in Canada, when this country has enough refining capacity to meet virtually all of our fuel needs and all the crude oil it needs to supply the Canadian market. Economist Hugh Mackenzie of the Canadian Centre for Policy Alternatives, an independent research institute, believes he knows part of the reason for high prices. “ What we have seen over the past month is nothing short of price gouging,” he says in a study released last week. Mackenzie argues convincingly that the increases amount to “ profiteering.”

Slowly, the federal government has started to respond, announcing last week it would establish an agency to monitor fuel prices. However, the agency, which may take months to get up and running, seems toothless. It will only gather information and won’t have any regulatory power. Ottawa needs to do much more. While it is unrealistic to freeze prices, it is reasonable for the government to provide relief for low- income Canadians who will be hurt by high gasoline and heating oil costs this winter. Vague promises of help have been made, but nothing has happened.

It is time Ottawa stopped dithering, demand oilmen better explain their pricing policies, and took some immediate action to ease the burden on Canada’s poorest citizens. Time is short because, across the country, fuel prices are remaining high and temperatures are starting to fall.