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Les Leyne: Some reasons why gas prices in B.C. are so much higher than in Alberta

Alberta is taking direct action to trim the price of gasoline. B.C. is taking a different approach.
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Gasoline prices in B.C. are much higher than in Alberta. ADRIAN LAM, TIMES COLONIST

Premier John Horgan’s excuse for not trying to curb gas price jumps is that the industry will just jack prices higher to take up the room left by any tax cut.

But Alberta cut gas taxes five weeks ago, and there’s no evidence yet that oil companies seized the chance to charge even more. Alberta gas prices are generally rising, but the rate is smaller than B.C.’s. And it looks to be for the same global economic reasons everyone is citing.

Alberta “paused” the 13 cent-a-litre provincial tax on gas and diesel last month and tied the pause to the benchmark price for oil. So the tax holiday will last as long as the benchmark price stays high, and at least until July. Premier Jason Kenney said the provincial government would be watching “like a hawk” to see that the cut is reflected in pump prices.

“We sent a clear message to gas retailers that we won’t accept any games being played with this,” he said. Kenney said Alberta was ready to use legal tools if companies “tried to pocket a portion” of the cut.

The tax break would cost the Alberta treasury about $1 billion if it lasted a full year.

The retail gas market is hyper-competitive on pricing and the government is relying on that to bar individual companies from taking advantage.

A similar measure for natural gas could take effect next fall if natural gas prices are high. Ontario Premier Doug Ford, in the midst of a re-election campaign, promised something similar.

The Alberta cut took effect April 1 and the average per litre pump price went down to $1.57 from $1.67, according to media surveys. The full 13 cents wasn’t reflected because the federal carbon tax increased the same day.

The Canadian Automobile Association’s price tracker shows the average Alberta price Tuesday was $161.6.

By contrast, the CAA’s average price in Victoria is now $2.10 a litre, but $2.20 was common across the city Tuesday. It’s up at 30 cents in a month. The record high prices are holding all over the coast, although the Interior prices are lower.

B.C.’s response to the crisis is the $110 ICBC rebate that is now being distributed.

The steady hikes dominated the legislature Tuesday, as opposition B.C. Liberals demanded a similar tax holiday in B.C.

But Public Safety Minister Mike Farnworth insisted the gas companies would take advantage.

“Economists who understand the gas market have made it really clear that cutting gas taxes for the sake of cutting gas taxes does not guarantee that money goes back into people’s pockets. More often than not it is taken up by the gas companies that jack the price up.”

Provincial taxes on gas in Victoria amount to about 31 cents a litre.

He blamed the price hikes on the war in Ukraine, but critics said B.C. prices were much higher than elsewhere before the war started. Liberal MLA Peter Milobar said the B.C. pump price has gone up by 90 cents a litre since the NDP took power five years ago.

All of which make Horgan’s earlier promises about gas prices ill-considered.

After a hike just months into his first term as premier, he talked monitoring prices, “considering a range of options” and “taking steps if necessary.”

Five years later, there’s an ongoing review of gas prices by the B.C. Utilities Commission (which is forbidden from looking at the tax component) and a fuel-price transparency law that makes price data public every month. Guess what? They’re going up.

The most recent report tracked hikes that are obvious to everyone who drives by a gas station.

It also found that, as of March, retail margins in B.C. were 2.5 cents to 3.9 cents higher than in Alberta. The wholesale price for gas in B.C. was 17.7 cents a litre higher in B.C. than Alberta.

After years of intermittent huffing and puffing about gas prices, the only positive development is the creation of a useful website (gaspricesbc.ca) run by the BCUC. It allows you to see on your phone in real time how badly off you are compared with other places.

The premier can use it too, while he’s “considering his range of options.”

lleyne@timescolonist.com

>Victoria businesses that move people and goods around hit hard by soaring gas prices, B1