Les Leyne: Pulling back the curtain on gas prices

It likely won’t explain why every gas station in town raises and lowers their prices at the same time.

It certainly won’t explain why every hike comes when your tank is empty, and every price drop comes after you’ve filled up.

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But the Fuel Price Transparency Act, introduced by the government Monday, might be the beginnings of some kind of explanation about how gas prices are set in B.C.

The B.C. Utilities Commission just finished a brief but intensive inquiry into exactly that issue, on orders from Premier John Horgan.

It concluded a handful of oil companies have created an “oligopoly” in the market, and that there’s something funny going on, in terms of a 10- to 13-cent-a-litre price premium on the south coast. But it couldn’t fully explain why, saying the mystery needs further study.

One specific element in that inquiry appears to have spurred the introduction of the bill — that was the oil companies’ refusal to submit coherent evidence on their pricing.

When Jobs, Trade and Technology Minister Bruce Ralston introduced the bill, he made a point of saying “the industry refused to explain” that particular markup.

There was no smoking-gun evidence of price-fixing. The B.C. Utilities Commission inquiry found no evidence of collusion or cartel behaviour. But while price yo-yoing might look like a competitive market, “it’s also possible this pricing behaviour is tacitly choreographed.”

That was good enough for Horgan to insist there is “gouging” going on.

So the NDP government is going to force oil companies to submit reports regularly on all aspects of the supply chain — processing, refining, stories, transporting, marketing and supplying.

It’s a classic case of a government acting on its suspicions the way it knows best — by burying the suspects in paperwork.

Companies will have to make periodic fuel data submissions to the government — and attest that the information is accurate and complete.

If there’s any change in the market, the companies must make a supplementary submission within 30 days.

Once passed, the law will require that they keep enough records to verify the data they’ve submitted. The government can order the data be audited, and the act grants officials all the usual government powers to inspect and seize records or compel evidence.

Ralston told the legislature the bill will create greater transparency and sends a message “that the days of setting their prices in secrecy are coming to an end.”

Government will collect all the industry reports and publish reports on fuel data regularly, although there are exemptions for protected information and trade secrets.

Ralston said the data will be made public and will be available to consumer and watchdog groups.

“The intent is to improve both public confidence and competitiveness in the fuel market.”

He stopped short of promising it will lower gas prices. But he said it will provide the information needed “to identify steps that could lead to lower and more predictable gas prices.

“It’s time to pull back the curtain to get some answers on how the price is set.”

Washington state and California have some similar price transparency laws in place and the Maritime provinces and Quebec have some regulatory powers over gas prices.

While the new requirements will produce regular public reports based on up-to-date data on gas pricing, it’s still an open question whether anyone will understand them.

Industry responses to the inquiry were remarkably opaque. Several of them stressed that it’s a competitive market and government intervention can lead to unexpected consequences.

They’ve dodged that bullet, but only for the time being. The bill was referred to Monday as an initial response to the BCUC inquiry’s findings. After enough data is built up, the government will “decide on future steps,” said Ralston.

But the industry has doubts about even limiting the response to transparency. “Highly complex” supplies and “interwoven logistics” mean reporting pricing would be complex, burdensome, costly and unlikely to produce accurate information.

The government’s hope is that the new requirements to compile and submit masses of information on a regular basis will be read by the industry as “a message to moderate their prices.”

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