That heart-stopping 18-cent-a-litre hike in the price of Greater Victoria gas this week has people searching for an explanation.
The B.C. Utilities Commission spent a few months writing an opus on the price of gasoline in B.C. and couldn’t fully explain it. If those wizards can’t get to the bottom of it, there’s no hope for the rest of us.
Easier to cling to the virtually unanimous view that we’re getting gouged.
The BCUC itself recognized that is the prevailing view.
“The greatest level of concern among respondents was with respect to alleged price gouging with a number of them pointing to changes to the price at the pump in comparison to the cost of oil.”
The commission took a quick look at the issue on carefully contrived orders from Premier John Horgan. It was specifically prohibited from discussing whether provincial policies or taxes are to blame.
The August report is technical to the point of incomprehensibility. (“The spike in the crude arbitrage opportunity rose above the refined product arbitrage opportunity.”)
Still, there’s enough in it that anyone with a viewpoint can latch on to one part or another.
“This oligopolistic wholesale market has the characteristics of a natural monopoly”!!! (Exclamation marks mine.)
That’s a ready-made protest placard, if anyone wants to march in front of the legislature.
The commission also carefully noted: “Prices move up and down in a manner that gives the appearance of a functioning competitive market but it is also possible this pricing behaviour is tacitly choreographed such that there are numerous price changes throughout the day.
“This scenario does result in excessive daily volatility and may not be in the interests of B.C. consumers as it causes frustration.
“While concluding that current practices can be described as competitive, we are unable to conclude that this is in the best interests of consumers. There is a need for a better understanding of customer concerns.”
If there was a need for better understanding last summer, imagine the need today, after the price of gas jumped at many stations to the $1.58-a-litre range in a matter of minutes.
One of the central questions about gas prices is what to do about them. Should B.C. regulate them? The panel did a detailed analysis and didn’t provide a direct recommendation.
It did arrive at a few conclusions based on its survey of prices over the spring and summer.
It found a mysterious 13-cent-a-litre increase in the wholesale price between Vancouver and the U.S. Pacific Northwest, which supplies a fair amount of gas to B.C.
That started four years ago, and no explanation could be found for it.
Oil companies have since contested that finding, and the whole argument is now in the hands of the provincial cabinet.
Behind the pump price lies a complicated nest of issues. The supply from the U.S. versus Alberta, the role of the current Trans Mountain pipeline and the expansion, the number of refineries in B.C. (two) and the drive to electric cars are a few.
There are also political calculations about whether the government should step in, and how.
The one clear conclusion this week is that oil companies did themselves no favour by jacking up the Victoria price.
Imposing the largest increase in years on the provincial capital just days after an inquiry commission closed the consultation phase on gas prices will go down as an indisputably dumb move.
It creates a lot more pressure on the government to do something — anything — about the issue, which is exactly what the industry doesn’t want.
Independent watcher Dan McTeague suggested the industry is belatedly catching up to earlier wholesale price hikes. He said the new sky-high price might last for a few weeks, then come down.
But consumers are much more likely to scream about a sudden price hike than give thanks that the price was kept low for so long.
In earlier submissions, the industry referred to the “invisible hand” of the market — that host of indiscernible factors — as one of the price-setting factors.
If that’s the case, the invisible hand just gave local customers the finger.