Automotive

BC government commission report on gas prices

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  • Sep 4th, 2019 11:16 pm
[OP]
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Jan 21, 2018
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Vancouver

BC government commission report on gas prices

The BC government commissioned a report by the Utilities Commission looking into high gas prices when they exceeded $1.70/l earlier this summer in Vancouver, mostly as a way to deflect blame onto suppliers instead of government taxes.

The report was released yesterday. It says that after accounting for all known issues that would make prices higher in BC and in Vancouver specifically, including things like high land cost in Vancouver, limited sources of supply, transportation costs etc., there is a residual amount of 13 cents/litre that is "unexplained". The implication is that this amount is unjustified profiteering by suppliers.
https://www.cbc.ca/news/canada/british- ... -1.5266014
The report itself does not seem to be posted yet: https://www.bcuc.com/ApplicationView.as ... tionId=681

The government told the commission that they were not to investigate taxes, and the gas companies refused to discuss their profits with the commission (https://www.cbc.ca/news/canada/british- ... -1.5198330).

A breakdown of gas taxes in Vancouver (from https://www.cbc.ca/news/canada/british- ... -1.5103973):

"Here's a list of all the taxes you pay on a litre of gas in B.C.:

Provincial motor fuel tax (Metro Vancouver) — 1.75 cents
Provincial motor fuel tax (everywhere else in B.C.) — 7.75 cents.
B.C.'s carbon tax — 8.89 cents.
The B.C. Transportation Finance Authority tax — 6.75 cents.
TransLink tax (If you live in Metro Vancouver) — 17 cents, increasing to 18.5 cents on July 1.
Transit tax (If you live in Victoria) — 5.5 cents.
Federal excise tax — 10 cents.
Finally, pay the five per cent Goods and Services Tax on top of the total price.

When you add it all up, you're paying more than 60 cents a litre in tax if you live in Metro Vancouver."
16 replies
Deal Expert
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Jul 30, 2007
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That’s not surprising at all.
Deal Fanatic
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Jan 9, 2011
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Yes prices are high and every station's prices seem to go up and down together. But I don't understand how everyone seems to think it's because of collusion between the gas companies. That doesn't make any sense to me. Prices of fruits and vegetables go up and and down daily by even larger amounts. Tomatoes are 1.99 all over town one day, then 2.99 the next day, and back to 1.99 again the day after. Hotels too, they all jack their prices up at the same time and lower them the same time. Nobody screams collusion when this happens in the hotel room and produce market. The report mentioned above dismissed any collusion between the gas companies. Time to put this conspiracy theory to rest already.
[OP]
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Jan 21, 2018
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Kiraly wrote: Yes prices are high and every station's prices seem to go up and down together. But I don't understand how everyone seems to think it's because of collusion between the gas companies. That doesn't make any sense to me. Prices of fruits and vegetables go up and and down daily by even larger amounts. Tomatoes are 1.99 all over town one day, then 2.99 the next day, and back to 1.99 again the day after. Hotels too, they all jack their prices up at the same time and lower them the same time. Nobody screams collusion when this happens in the hotel room and produce market. The report mentioned above dismissed any collusion between the gas companies. Time to put this conspiracy theory to rest already.
The commission found no evidence of collusion. But collusion is difficult to prove. It would require evidence of an actual agreement between competitors to adjust prices together and not undercut each other. It normally requires a whistleblower, as there is seldom a "smoking gun" document with the agreement written down. There is the appearance of possible collusion if competitors all adjust their prices together when there is an unexplained profit margin and no competitor seems eager to undercut the others. But an appearance doesn't prove any actual illegal agreement. As you say, there are other markets where prices are volatile and competitors often move up and down in price together. The difference is that in most of those markets there are always some competitors and some channels undercutting the others (e.g., budget hotels, online discounters...).
Deal Addict
Jan 14, 2009
1675 posts
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Vancouver, BC
Scote64 wrote: The commission found no evidence of collusion. But collusion is difficult to prove. It would require evidence of an actual agreement between competitors to adjust prices together and not undercut each other. It normally requires a whistleblower, as there is seldom a "smoking gun" document with the agreement written down. There is the appearance of possible collusion if competitors all adjust their prices together when there is an unexplained profit margin and no competitor seems eager to undercut the others. But an appearance doesn't prove any actual illegal agreement. As you say, there are other markets where prices are volatile and competitors often move up and down in price together. The difference is that in most of those markets there are always some competitors and some channels undercutting the others (e.g., budget hotels, online discounters...).
Collusion is hard to prove but even hard to maintain in the face of market forces. There will always be cheaters due to greed, just look at OPEC. It's not like gas retail is a lucrative money printing business. The large US O/G players sold their Canadian gas retail due to crap margins.
Deal Addict
Sep 6, 2017
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Crude oil hovering 60 usd a barrel and gas prices are those when it was like 90 usd a barrel.
Deal Guru
Jan 27, 2006
12097 posts
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Vancouver, BC
Realistically, this commission report was really an attempt to show that the government was 'doing something' and nothing else. It also shows that the government didn't trust the commission from the get-go as the government limited the scope, powers of the commissions, and the time allowed reducing the commission's ability to do any deep investigations.

If the government really wanted to know what's going on, they should have let the commission more power and time to do a thorough investigation instead of just a show investigation. Of, the government doesn't have a good track record of letting investigative bodies do their work and following their recommendations... just look at the various commissions they struck when they first got into power and how many were basically rendered useless by the government actions even BEFORE those commissions had even finished their investigations or came up with any recommendations.
Sr. Member
Jul 25, 2015
864 posts
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BC government wanted high gas prices to curb behavior to minimize driving and therefore lower GHG. But then complain when gas prices are too high...

They got exactly what they wanted until it started to effect the polls.
Deal Guru
Jan 27, 2006
12097 posts
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One thing I found out recently is BC requires Low Carbon Fuel - https://www2.gov.bc.ca/gov/content/indu ... rbon-fuels - which isn't a requirement in Alberta or Washington state so the refineries will have to do a special order for BC and with anything that is a special order, it's more expensive and can't necessarily be purchased on the open market (as it's a special order). But since this regulation isn't in the scope of the inquiry, it gets no mention anywhere.
[OP]
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Jan 21, 2018
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craftsman wrote: One thing I found out recently is BC requires Low Carbon Fuel - https://www2.gov.bc.ca/gov/content/indu ... rbon-fuels - which isn't a requirement in Alberta or Washington state so the refineries will have to do a special order for BC and with anything that is a special order, it's more expensive and can't necessarily be purchased on the open market (as it's a special order). But since this regulation isn't in the scope of the inquiry, it gets no mention anywhere.
In this context "low carbon" simply means 5% ethanol for a token tiny reduction in CO2 output. It's hardly a big deal to mix a little ethanol with the gas.
Deal Expert
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May 10, 2005
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Ottawa
Sinasta wrote: BC government wanted high gas prices to curb behavior to minimize driving and therefore lower GHG. But then complain when gas prices are too high...

They got exactly what they wanted until it started to effect the polls.
And all that extra cost to BCers and the GHG is the same as before.
They got exactly what they wanted and voted them in again so, be prepared or more..

In the meantime, here in Ontario, the Ford government is making gas station owners put a sticker on the pumps to show how much the federal carbon tax is costing us. Oh and I filled up on Thursday night, here in Ottawa, for $1.08 per liter.
The Government cannot give to anybody anything that the Government does not first take from somebody else.
Deal Addict
Feb 4, 2015
4958 posts
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Canada, Eh!!
Pete_Coach wrote: And all that extra cost to BCers and the GHG is the same as before.
They got exactly what they wanted and voted them in again so, be prepared or more..

In the meantime, here in Ontario, the Ford government is making gas station owners put a sticker on the pumps to show how much the federal carbon tax is costing us. Oh and I filled up on Thursday night, here in Ottawa, for $1.08 per liter.

Hah... same price as Fergus, On where we were visiting friends on Friday... $1.079 for regular.
Deal Addict
Sep 1, 2004
4455 posts
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I don't know what this accomplishes. All I see is GVR is paying 50c more than Calgary and it all reflected on taxes. An if gas price goes up again, the effect is amplified by sales tax.

And given they really want to push people into EVs, I think they should just refuse gasoline from AB and make it even higher to accelerate adoption.
Deal Guru
Jan 27, 2006
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Vancouver, BC
Scote64 wrote: In this context "low carbon" simply means 5% ethanol for a token tiny reduction in CO2 output. It's hardly a big deal to mix a little ethanol with the gas.
It depends if the refinery has to mix it in just for the batch heading to BC or if it's done all of the time. Changing any step at the refinery will cost money and refineries will charge what they can get away with when that happens. However, if you buy what everyone else is buying, there's no reason to have the extra charge.
Deal Guru
Jan 27, 2006
12097 posts
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Vancouver, BC
Xtrema wrote: I don't know what this accomplishes. All I see is GVR is paying 50c more than Calgary and it all reflected on taxes. An if gas price goes up again, the effect is amplified by sales tax.

And given they really want to push people into EVs, I think they should just refuse gasoline from AB and make it even higher to accelerate adoption.
What this accomplishes is it gives the government the preception of actually 'caring' about the average Joe six-pack and their daily commute cost (ie most likely those who live in the Fraser Valley/Surrey/Delta) so when it comes time for an election they can hold on to those seats when that they got by removing tolls from bridges which were supposed to reduce congestion and GHG emissions...

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