We are being gouged at the pump.
Gas prices are quick to rise but slow to fall.
High gas prices are hurting British Columbians.
I’ve been reading and hearing such sentiments for years from frustrated consumers. I wasn’t expecting to see them mirrored in a June 27 report for the B.C. Utilities Commission.
The word “collusion” is nowhere to be found in the 42-page report, An Inquiry into Gasoline and Diesel Prices in British Columbia: The Case for Regulatory Oversight to Address Market Failure. However, its authors, former ICBC CEO Robyn Allen and Marc Eliesen, a former Suncor director and chair and CEO of BC Hydro, do make use of another C-word in their analysis: competition.
Allen and Eliesen say the reason gasoline and diesel prices are volatile and high in B.C, is “due to market failure brought on by a lack of competition.”
“This report finds that an absence of competition among refined product suppliers has caused the market to fail,” states the report. “Regulatory oversight is needed. Price is not a function of cost plus a reasonable return on investment as should exist in a functioning market. Price is a function of what the market can bear. This is price gouging.”
Regarding how gas prices are quick to rise/slow to fall, the report refers to this as an “asymetric price adjustment” and another sign of market dysfunction.
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“Skyrocketing prices that resist downward adjustments are not only unfair, they portend dire economic consequences. Volatile and rapid prices that do not reflect the cost structure realities of refiners and marketers exacerbates income inequality and acts as a drag on the performance of B.C.’s economy.”
The report also pokes holes in public/media narratives surrounding gas shortages and refinery shutdowns justifying a price increase. Allen and Eliesen argue there is no lack of refined product supply to B.C., chronic or otherwise, stating refiners plan carefully to ensure customers are not faced with shortages.
Not surprising, given its title, the report recommends to the B.C. government that gasoline and diesel prices be regulated by the independent BC Utilities Commission. The main objectives of such oversight include predictability and affordability, as well as transparency and accountability. So when gas prices spike, the public doesn’t have to turn to a third-party internet website for explanation.
“Third party rationale explaining away price spikes and volatility appears designed to serve the price gouging behavior of suppliers rather than shed light on actual market factors and conditions…,” state Allen and Eliesen. “Those who determine prices need to be accountable for them through a disciplined and consistent regulatory regime.”
@SalmonArm
newsroom@saobserver.net
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