Jack Knox: Buckle up, Victoria, analyst says gas could hit $1.70

Victoria gas prices jumped 11 cents a litre on Monday, reaching 1.629 at some stations. I guess that means the pandemic is over.

Jeezly weezly, wasn’t it just last spring that the price fell below a buck litre? Yes, yes it was, but that was also when we were trembling under our beds with a deer rifle in one hand and a 48-pack of Purex three-ply in the other. The roads were as empty then as your wallet is today.

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Why Monday’s sudden jump? The easy answer is supply and demand. People are driving again, because it’s summer and because the loosened rules says they can. Sunday afternoon’s southbound Malahat traffic inched along like it did in the good (bad?) old days.

B.C. Ferries numbers reflect the surge. Before travel restrictions were lifted, ferry traffic was half what it was pre-pandemic. On Sunday, the passenger count was only down by 30 per cent compared to 2019, and the vehicle count was only down 15 per cent. A big rebound is happening. People are on the move again.

But there’s more to the gas price jump than that, said Dan McTeague, the president of an outfit called Canadians for Affordable Energy. (You might remember him from his days as an analyst at GasBuddy.com or his time as a Liberal MP.)

There was a big jump in the wholesale price of gas after the Phillips 66 refinery in Ferndale, Washington, suffered a breakdown last week, McTeague said. That contributed to Victoria retailers paying $1.49 a litre.

They had no choice but to raise their prices.

And there’s more pain at the Victoria pumps on the way, he predicts.

“It will go higher,” he said, on the phone from Ontario. “You’ll be paying a buck-seventy at some point in the next month.” (He plans to add a gas price predictor to his affordableenergy.ca site soon.)

He breaks down the cost of what Victoria retailers pay for their gas. There’s the 10-cent-a-litre federal excise tax. There’s the 9.9-cent carbon tax. There are 20 cents worth of local and provincial taxes, including the 5.5-cent tax that helps pay for the transit system. There’s GST.

The taxes are on top of the $1.01 wholesale price, which McTeague estimates is inflated by 14 cents worth of costs tied to B.C.’s low-carbon fuel requirements. When gas companies can’t hit those standards they must buy carbon offsets, and the cost of offsets has gone up.

Government tends to have a different take. You might recall that after a big spike in the price of gas in 2019, Premier John Horgan ordered an inquiry into gas costs (albeit one that didn’t look at the role of taxation).

The subsequent B.C. Utilities Commission’s report found that when comparing Greater Vancouver to the Pacific Northwest, there was “a significant unexplained difference of approximately 13 cents a litre” that wholesalers couldn’t explain. The report said a handful of wholesalers constituted an “oligopoly” whose control over distribution networks left retailers without alternative sources.

In consequence, B.C. brought in the Fuel Price Transparency Act, requiring fuel suppliers to make certain data public, the idea being that disclosure of the numbers would promote more competition at the pump and goad Big Oil into slashing prices. As it turned out, the legislation arrived at the same time as the pandemic, and prices fell anyway.

But now those prices have lurched back up again, alarmingly, like Glenn Close coming out of the bathtub in Fatal Attraction. And we are shocked – shocked! – because gas prices have never leaped suddenly before, except for every year since the 1970s.

So, what are you going to do about it? Maybe nothing, if you have one of those jobs, or incomes or lives that means you have no choice but to suck it up and pay whatever the pump says. Or maybe you’re one of the lucky ones who can actually choose not to gas up, saving a bit of money, and the planet, in the process.

jknox@timescolonist.com

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