Bob’s Weekly Report – Why are gas prices so high?

BY BOB ZIMMER

Prince George-Peace River-Northern Rockies MP

One of the questions I get asked a lot is, “Why are our gas prices so high?”

Many residents are also frustrated by the vastly different prices throughout the region. For example, one day this summer gas was 128.9/L in Dawson Creek, while in Fort St. John it was 145.9/L, 133.5/L in Fort Nelson, and 134.9/L in Prince George.

So why does gas cost as much as it does?

First there are taxes, which make up about 33 per cent of the price of gas. In British Columbia, for every litre of gas we put in our vehicles we pay 7.78 cents for the carbon tax, 6.75 cents for the BC Transportation Financing Authority fuel tax, 1.75 cents for BC’s motor fuel tax, 10 cents for the federal fuel excise tax, and then the sales tax charged on the total purchase which includes the other taxes. Those in Vancouver and Victoria also have to pay an additional transit tax.

According to the Competition Bureau, other factors that can affect gas prices include competition in the marketplace, supply and demand, and the transport costs to get gas to some regions of Canada.

The unfortunate reality for our region is that we do not have as much competition as there is in other parts of the country to help drive down the cost of gas. For example, cities that have wholesale stores like Costco tend to have lower gas prices because those stores can purchase large quantities of gas at a cheaper rate and in turn charge less at the pumps, forcing their competitors in the area to lower their prices as well.

The same can be said about almost everything we purchase.  It is why stores offer price matching and why a bag of chips may cost $4 at the only corner store in a small town, but costs $2 at the large grocery store in the suburbs. Unfortunately, for most of our region, we don’t have the supermarket price as an option when it comes to gas.

The rise in gas prices can also be attributed to the fact that our refineries and pipelines are working at maximum levels with no way to increase capacity.

According to the Canadian Fuels Association, less than 30 per cent of the province’s gas comes from refineries in British Columbia. The rest comes from Alberta, with a small amount coming from the US West Coast and Saskatchewan.

It is why it is vital that projects like the Trans Mountain Pipeline Expansion move forward to help increase capacity levels.

There are also valid questions being raised about why the cost of gas in our region varies so much. We often hear that trucking costs are one of the reasons for the price difference. However, a friend in the trucking industry pointed out to me that the cost to truck fuel from Dawson Creek to Fort St. John does not warrant the price. According to him, the cost for a B-Train to drive between Dawson Creek and Fort St. John is $200 per hour, however the 50,000 litres of fuel from that truck is being sold to consumers in Fort St. John for approximately $9,000 more. This is a major discrepancy and something that industry leaders need to explain more fully to the public.

I know many of you want the federal government to do something about gas prices. However, we have already seen the long-term negative effects of the federal government intervening in the marketplace of the energy sector with Prime Minister Pierre Trudeau’s failed National Energy Program.

What we don’t need is the government demanding discounted oil. What we need is competition.

That said, if you have evidence of price-fixing or other anti-competitive activity in the retail gasoline sector, I would encourage you to call the Competition Bureau at 1-800-348-5358. You can also contact my office at 1-855-787-4567 if you have any other questions or concerns about gas prices in the region.