The recent report from the B.C. Utilities Commission about pain at the gas pump appears to confirm what Lower Mainland drivers have known all along: they are getting hosed.
The report found gas prices in Greater Vancouver idling at 13 cents a litre more than could be expected under a normally competitive market. That difference – estimated to cost us about $490 million annually – “cannot be explained by economic theory or justified by known factors in the market,” according to the report.
The high gas prices aren’t caused by taxes (already taken into account in the BCUC number crunching) or pipeline capacity.
Rather, they appear to have everything to do with the fact that the market is tightly controlled by a handful of companies. While the report states there is no evidence of “collusion,” it also suggests prices might be “tacitly choreographed” – the difference between those likely being lost on people unhappily surprised when prices all jump 10 cents a litre.
So why are prices higher in Vancouver then they are in many other places?
Essentially, because they can be.
It’s hard to see what’s happening at the pump as the result of a truly free market.
That being the case, one option for the government is to intervene with regulation. Price caps and requirements for greater transparency are possibilities – measures that are already in place in other parts of both Canada and the U.S.
Why should the province motor along and get blamed for that 13-cent price gouge, when it appears to benefit no one but the bottom line of big oil companies?
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