IN THE NEWS ~ NDP Calls for Gas Price Monitoring

NDP Calls for Gas Price Monitoring
By Rory Xu
Epoch Times Kingston Staff Apr 12, 2007

Gas prices in Canada, and around the world, keep going up. (Justin Sullivan/Getty Images)

Warmer temperatures bring more road travel, and the seemingly ever-rising price of gas has drivers concerned. A recent Ipsos-Reid survey showed that a majority of Canadians believe they are being gouged by the petroleum companies, and they want something done about it.

So does the New Democratic Party. NDP transportation critic Peter Julian recently called on the federal government to implement a nation-wide regulatory agency to monitor the price of oil and gas.

"It is unfair for Canadian consumers to be gouged at the pumps and meanwhile, big gas companies continue to reap record profits," says Julian.

Federal legislation to create a gas monitoring agency was proposed by NDP MP Brian Masse, and NDP MLA John Horgan brought forward a similar bill to regulate prices on a provincial level.

"An independent watchdog needs to be set up to monitor prices and help protect against future gouging," says Julian. "Oil companies and energy producers should have to justify and defend cost increases." The NDP will broach a Petroleum Prices Review Board at the federal level this spring.

Gasoline prices in Canada have been soaring since early February this year and remaining high. Statistics Canada's March 2007 report shows that over January and February, pump prices increased 3.8 per cent nationwide, with a climb of 9.8 per cent in Ontario, 1.7 per cent in Quebec, and 2.1 per cent in Alberta.

Nationwide gas prices averaged $1.06.2 in April, according to the MJ Ervin & Associates weekly pump price survey. Despite the high prices, a gas shortage in Ontario last month prevented many drivers from filling up.

Ted Stoner, vice president of the West Division of the Canadian Petroleum Products Institute (CPPI) says the high gasoline prices are influenced mainly by higher crude oil prices, which have been triggered by increased international demands in developing countries. As well, geopolitical events such as the war in Iraq and the recent incident in which British sailors were held captive by Iran also drive up crude oil prices.

Gasoline prices are influenced by the cost of crude oil, wholesale cost, taxes, and local market dynamics and competition. A change in any of these factors will influence gasoline prices, according to the CPPI.

However, many Canadians believe the high cost of gas is more a result of gouging than anything else. The Ipsos Reid poll shows that 61 per cent say petroleum companies should be called to testify and explain to an all-party Parliamentary Committee why pump prices have increased in recent weeks.

Julian says if there's an anticipation of gasoline shortages after an incident, the pump prices are raised right away, and profits are obtained through increased prices of the old oil stock. An increase of $US1 in crude oil prices would justify a 0.7- 0.9 cent CDN per litre increase at the pump, says a report by the Canadian Centre of Policy Alternatives. "However, the increase goes upward twice to about 1.5 cents per litre in reality," says Julian. When crude oil prices go down, says Julian, gasoline prices are not lowered accordingly. He points out that crude prices went down to $64 per barrel last Thursday, but prices spiked over the long weekend when more drivers took to the road. Julian says there is a "Gentlemen's agreement" where one company sets the price high, and other companies follow suit. But the Competition Bureau, set up by the federal government to ensure a fair and competitive marketplace, has conducted six investigations on spiking gas prices since 1990, and found no evidence of a conspiracy to fix gasoline prices, according to a Bureau fact sheet. The CPPI adds that too-low prices could decrease investment in refineries, as well as lead to a shrinking in imports and domestic supply. In addition, Canadian oil companies cannot charge less to Canadian customers under NAFTA.

Julian says that this is not about changing the free trade agreement or interfering with competition in the free market. "We call it gouging, because this is non-competitive, and it should be stopped," he says. A motion to establish a petroleum monitoring agency in April 2005 was defeated. Fuel Focus, a bi-weekly report by Natural Resources Canada, states that gas regulation would lead to stable fuel prices, but would not lower prices. In the meantime, the government is not considering a cut to gasoline taxes. On average, taxes account for approximately 35 per cent of gas retail prices in Canada.