Fuel suppliers won’t release profit details to B.C. probe into gas prices

The companies behind most of B.C.’s major gas stations are refusing to provide details about their profit margins to a government-ordered inquiry into retail gasoline prices.

Husky Energy, Suncor Energy and Shell Canada — with a combined almost 500 gas stations under retail brand names that include Petro-Canada and Esso — declined to give the independent B.C. Utilities Commission information about their retailing margins, which would show how much money they make per litre of gasoline at the pump.

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Husky called the information “commercially sensitive and confidential,” while Suncor replied that it “is not prepared to provide its retailing margins at controlled sites as this information is competitively sensitive.”

In its written submission to the commission, Shell Canada also declined to provide specific information regarding its retail and wholesale gasoline and diesel retail margins, saying it was commercially sensitive.

The three companies are among the largest players in B.C.’s retail gas market. Their refusal to volunteer key data might prove problematic for the commission inquiry, which was ordered in May by the provincial government to examine the factors behind record-high gas prices in the Lower Mainland.

Premier John Horgan has said he wanted to know if price gouging was at play.

Suncor spokesperson Paul Newmarch said in a statement Tuesday that it will continue to co-operate and provide information to the utilities commission that is not competitively sensitive.

Husky spokesman Kim Guttormson said the commission is unable to safeguard the information to the company’s satisfaction.

Commission hearings begin next week in Vancouver. The government did not allow the commission to examine the role of provincial taxes in the price of gasoline.

Gas prices spiked to more than $1.70 per litre in the Lower Mainland in May, but have since declined to the $1.40 to $1.50 range.

7-Eleven Canada, which operates 124 retail gas stations in B.C., was the only international retailer to provide profit-margin data on gasoline and diesel. It asked the utilities commission to keep the information confidential, and redacted the figures from its publicly posted written reply.

Super Save Gas, a smaller player with 40 gas stations in B.C, also handed over financial data confidentially.

The National Energy Board, in its submission, said the refining margin (the difference in value between the refined product and the crude oil used to make it) on regular gasoline in Vancouver in April averaged 52.1 cents per litre, roughly double the Canadian average. The retail margin was a further 10.5 cents a litre, about 54 per cent higher than the Canadian average, according to the NEB.

Transit, provincial and federal taxes add another 52 cents per litre in Metro Vancouver.

The utilities commission could compel testimony and documents from companies as part of its review.

The inquiry panel is reviewing the submissions and will determine if further information is required, chair and CEO David Mortin said in a statement.

The oil and gas companies offered various explanations for the price of gas and diesel at the pumps in their submissions, with many citing U.S. benchmarks, limited capacity on the existing Trans Mountain Pipeline, the increased cost of B.C.’s low-carbon gasoline standards and a rising minimum wage.

Suncor was one of several companies that blamed the federally owned Trans Mountain Pipeline for changes that have limited the flow of crude and refined oil and gas for use in B.C. markets.

Horgan has said he has talked to Prime Minister Justin Trudeau about trying to get more refined gas to B.C. through the existing pipeline.

In the past three to five years, the Trans Mountain Pipeline has decreased its capacity allocated to finished products — gasoline and diesel — delivered to Suncor’s B.C. terminals by about 30 million to 36 million litres per month, which resulted in an increase in more costly transportation by rail and truck, Suncor said.

Imperial Oil, which transports gas and diesel from its Strathcona refinery near Edmonton but does not operate retail gas stations in B.C., also said Trans Mountain has let it ship less product to B.C. in the past five years, resulting in increased shipping by rail and marine vessel.

Parkland Fuel Corp., which operates B.C.’s largest refinery in Burnaby, said Trans Mountain is the only viable way to get the light crude it needs to refine into gasoline, but it cannot get enough product.

“Because of capacity constraints on the Trans Mountain Pipeline and the method used to allocate capacity on the pipeline, the refinery is often forced to purchase space [if possible] from other shippers, which comes at a significant premium over tariff rates,” it wrote.

The B.C. Utilities Commission will not examine whether the twinned Trans Mountain Pipeline expansion project — recently approved by Ottawa — would help reduce Vancouver gas prices. But Parkland said that expansion would help address the supply issue.

Trans Mountain said Tuesday its pipeline has operated at capacity for more than a decade, and the amount of requests to ship product exceeds the available space. Capacity is allotted using a process the National Energy Board approves, which mixes historical usage and export contracts.

B.C.’s low-carbon fuel standards were also cited as a cost pressure by several companies.

Suncor said prices in Vancouver are highly correlated to wholesale market prices in the U.S. Pacific Northwest, including Portland.

An extended unplanned refinery outage on the U.S. west coast in 2019 drove the Portland price higher than other markets.

Suncor, which operates an Edmonton refinery, also blamed a 30 per cent increase in overall petroleum costs over the past five years for raising prices, as well as a 30 per cent increase in maintenance, 20 per cent increase in rental expenses, and a 21 per cent increase in B.C.’s minimum wage.

Shell cited increased operational costs for storage, distribution by truck to gas stations, maintenance and municipal and property taxes. The company barges refined gasoline from the U.S. Pacific Northwest to supply its storage terminals in Burnaby and Chemainus, as well as gathering diesel by rail from Alberta.

Husky cited the carbon tax, B.C. Hydro rates, credit card fees, health taxes, leasing costs and an average two per cent annual increase in the cost of labour as factors that drove up wholesale prices in recent years.

7-Eleven redacted most of its cost data as part of the detailed retail margins it submitted to the commission in confidence. However, it did cite the higher cost of summer gasoline and wildfires as cost drivers on pump prices.

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