British Columbia

'We should be setting a maximum price on gasoline': Policy researcher wants government to ease pain at pump

Industry gouging and a lack of regulation is behind the high price of gas in British Columbia, says a research institute that's calling on the province to do more to make gas affordable.

Gas prices have soared by about 55 cents a litre in Vancouver over the past 3 years

Gas prices at Vancouver pumps have hit $1.70 a litre and up. (Associated Press)

Industry gouging and a lack of regulation is behind the high price of gas in British Columbia, says a research institute that's calling on the province to do more to make gas affordable.

Gas prices have soared by around 55 cents a litre in Vancouver over the last three years, with the cost at the pumps hovering between about $1.60 and $1.70 a litre for regular over the past few weeks.

"We should be setting a maximum price on gasoline, which is what they do in the maritime provinces," said Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives in B.C.

Lee has been looking into the reasons behind the cost of gas and he says — unlike what many appear to believe — taxes are not the main culprit.

"The data breaks gas prices down into four main components and taxes are the one that gets a lot of attention," he said.

"But of that 55 cent increase … only six cents is due to increased taxes."

Those taxes include two carbon tax increases — one this month and one last year — as well as the federal GST levied on the entire price.

"The other 49 cents of the 55 cent increase is due to market factors," Lee told Stephen Quinn, host of CBC's The Early Edition.

Marc Lee argues the province should do more to regulate prices and set a maximum price on gasoline. (Evan Mitsui/CBC)

One of those, the price of crude oil, affects gas prices equally across provinces. But the main culprits, Lee said, are the margins going to the refining industry and, to a lesser extent, retailers.  

"We're seeing gouging on the part of industry, in particular refiners," he said.

"The refining industry is charging far more to consumers because they can. It's a very uncompetitive market."

'A lot of money leaving Vancouver' 

Lee pointed to the main refiners of Vancouver's gas: a Calgary-based corporation and three refineries in Edmonton.

"In Vancouver, [there are] much higher margins than you'd see in, say, Calgary or Toronto or other markets," Lee said.

"There's a lot of money leaving Vancouver and going to Alberta. I think it's time for governments to step in and regulate this market."

He dismissed explanations like a lack of supply for gas price fluctuations .

"We have storage tanks. We have the ability to manage routine maintenance and downtime, so we should be able to have a stable market," Lee said.

"If the four refineries supplying gas to Metro Vancouver aren't able to do that, then it's important for the government to step in and regulate that market."

Industry gouging and a lack of regulation is behind the high price of gas in British Columbia, says a research institute that's calling on the province to do more to make gas affordable. 7:23

More capacity, not price-fixing

Ken Green, the chair in energy and environmental studies at the Fraser Institute, disagreed government-imposed price caps are the solution. 

"What balances demand and supply is price of oil," Green said. "It rarely has anything to do with price fixing."

He said the cost of oil has a much bigger impact on the cost of gas than refinery profits.

"The issue is that B.C. doesn't have enough oil from Canada and it imports from Washington," he said.  

"Ottawa needs to basically insist on its prerogative to build a provincial pipeline ... the real answer is more capacity."

With files from The Early Edition

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