British Columbia

Gas price inquiry questions Trans Mountain capacity, company denies collusion

One of the largest fuel companies in British Columbia says there's no retail market more competitive than gasoline in Canada and denies any price setting between competitors.

Inquiry will conclude with a final report by the panel due Aug. 30

Prices at a gas station at Main Street and E. 41st Street in Vancouver hit almost $1.73 per litre on April 23. A public inquiry began Wednesday into the high price of gasoline and diesel in the province. (Gian-Paolo Mendoza/CBC)

One of the largest fuel companies in British Columbia says there's no retail market more competitive than gasoline in Canada and denies any price setting between competitors.

Ian White, senior vice-president of marketing and innovation for Parkland Fuel Corp., told a three-member panel leading a public inquiry into the province's gas prices Wednesday that a price difference of a tenth of a cent per litre can be enough to lose customers.

Parkland Fuel operates gas stations under Chevron and other banners, supplies fuel to airlines and BC Ferries, and owns and operates one of B.C.'s only refineries in Burnaby.

White says while factors like clean washrooms and convenience stores can influence consumers, they simply won't visit your gas station if you don't have a competitive price.

'Not evidence of collusion'

Economist Henry Kahwaty, who was hired by Parkland, says that environment leads retailers into a race to the bottom until they reach unprofitable prices, at which point there is typically a price jump and the process repeats itself.

But he says controlling that process would require a significant level of co-ordination, considering almost half of the gas stations in B.C. are run by independent dealers rather than companies.

"This is not evidence of collusion," Kahwaty said.

Wednesday was the first of up to four days of oral hearings in the inquiry, continuing in Vancouver.

Premier John Horgan called the public inquiry in May as prices at the pump reached a record-breaking $1.70 per litre.

At the time, the B.C. Liberals and Alberta government bought advertising blaming Horgan and linking his government's resistance to the Trans Mountain pipeline expansion and taxes to the surging costs.

Jean-Denis Charlebois, chief economist for the National Energy Board, told the inquiry panel he can't account for an independent report that contradicts its claim that the Trans Mountain pipeline is operating at capacity.

Charlebois told the three-member panel that in the first quarter of 2019, the Trans Mountain pipeline was operating at 98 per cent capacity.

Economists say Trans Mountain not at capacity

The panel asked if he could shed light on a report by economists Robyn Allan and Marc Eliesen, the former president of the Insurance Corp. of B.C. and chief executive of BC Hydro, respectively.

Allan and Eliesen say their analysis found the Trans Mountain capacity is 400,000 barrels a day, falling to 300,000 barrels a day only if 20 per cent of the capacity is taken up by heavy oil. But it rarely reaches that threshold of heavy oil and Allan and Eliesen claim there were 97,000 barrels a day of capacity in the first quarter of 2019 that were not used.

Earlier Wednesday, Liberal Leader Andrew Wilkinson issued a statement criticizing the government for the inquiry's short timeline and terms of reference, which limit it from investigating government activity that affects gas prices.

"It is outrageous that an investigation into fuel costs would be barred from considering the impacts of fuel taxes, transit taxes, and the government's opposition to increasing pipeline capacity," Wilkinson says.

The inquiry will conclude with a final report by the panel due Aug. 30.

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