While visiting family in Vancouver recently, my sister actually called me to say that on her drive home from our mom’s house, she noticed gas prices had dropped significantly to — wait for it — $1.58.9.
“If there’s room in your gas tank you should take advantage of this low price,” she said.
She wasn’t being facetious. That was indeed a very good price and, as luck would have it, my son and I passed that gas station within 15 minutes, so we filled the almost-empty tank.
Earlier that week I had reluctantly put in just $30 worth of gas rather than fill up my son’s gas tank, because the price for a litre of fuel at that time in Vancouver was $1.72.9 per litre. In recent weeks, the price has reached as high as $1.78.9 cents in Metro Vancouver — the highest in North America.
As an Albertan, the pain caused by the hit to my wallet was dulled somewhat by the knowledge that British Columbians are getting a taste of what their anti-pipeline future will look like. As the fella in the Honda Civic behind me grumbled that he was limiting his fuel purchase to just $10 while waiting for prices to go down, even a little, I felt emboldened by my son’s B.C. licence plate and said: “We need the Trans Mountain pipeline expansion to be built.” He nodded unenthusiastically.
Those anti-pipeline folk who say the TMX expansion won’t help lower Vancouver’s gas prices are full of hot gas. The TMX is one of the few pipelines that can and does switch the products it transports, and refined gasoline and diesel is moved in it.
What sound facts and arguments haven’t been able to do to convince British Columbians about the need for increased oil and gas supply to B.C., just might be accomplished by the significant hit to their bank accounts.
On Tuesday,
B.C. Premier John Horgan asked the B.C. Utilities Commission to investigate why gas prices in the province have risen more sharply than the rest of the country.
“What British Columbians do not understand and cannot accept is a situation where the price of gasoline, correcting for differences in tax rates, gets increasingly out of line with the prices in the rest of Canada,” Horgan wrote.
Well, here’s hoping this column will help him and B.C. citizens understand things a bit better and not accept the status quo.
The reasons for Vancouver’s record-breaking gas prices are numerous. Let’s start with taxes.
According to data from
the Kent Group, which analyzes energy costs and volumes, the average price for a litre of gasoline in Vancouver in April was $1.67.4. Vancouver has a gasoline transit tax of 17 cents per litre that’s expected to increase to 18.5 cents per litre soon. In total, taxes account for 52.4 cents of the cost of a litre of gas — the single largest cost component of every litre sold.
The average crude cost in April was 51 cents, the marketing margin (what the retailer gets) was 12 cents and the refiner’s operating margin was a hefty 52 cents — a big take but still less than what the taxman takes.
By contrast, the cost for a litre of gas during April in Calgary was $1.22.5, with 35.6 cents going to taxes (19.7 cents to the province), 33 cents went to the refiner margin and a minuscule two cents per litre went to the retailers, who clearly are beating each others’ profits into oblivion in this highly competitive field. For a 75-litre tank, the difference to fill up in Calgary versus Vancouver in April was about $34 per tank. If, like many, the average person fills their tank once per week, that’s a hit of about $136 a month or $1,600 per year — a significant hit to most families’ budgets.
Horgan, who is being blamed by the opposition and many citizens for the spike in gas prices, said on Monday he asked Prime Minister Justin Trudeau to reduce the amount of diluted bitumen travelling from Alberta to Burnaby in the Trans Mountain pipeline that Trudeau’s government purchased, so that more refined gasoline could be shipped to Vancouver.
“I laid out for him my concerns about the inordinate spike in retail gas prices in British Columbia that were not connected to any policy decisions. It just seemed to be, in my opinion, gouging.
“I said I was disappointed to see so much diluted bitumen coming into the existing pipe at the expense of refined product. He understood that, he talked about the (National Energy Board) processes, I reminded him he owned the pipeline, and he concluded he would ask his officials to take a look at it. So I was encouraged by that.”
It’s ironic, to be sure, that Horgan, who opposes the twinning of TMX, wants the PM to meddle in long-term contracts and the role of the independent energy board that sets the supply flow to use a pipeline to solve his political problems. It’s galling.
Michael Ervin, senior vice-president with the Kent Group, says every time investigations are held into high gasoline prices, investigators “inevitably determine that prices are rational considering all of the factors.”
Spring, Ervin says, is the traditional time for refineries to slow production to do seasonal turnaround from producing winter-grade gasoline to summer-grade gasoline, just in time for peak demand. That is happening in refineries across North America, including in Washington State and California. One-third of B.C.’s gasoline comes from Alberta, which would be quite happy to provide more.
So, Premier Horgan, save the B.C. Utilities Commission the bother. Supply and demand caused by predictable refinery slowdowns, high taxes, a growing population and strangled supply are the reasons for your troubles. An expanded TMX pipeline would help.
