With gas prices popping over $1.60 across Metro Vancouver, many drivers are wondering what’s driving the spike.
B.C. Premier John Horgan says it’s a supply shortage, but on Monday, one independent economist offered a more controversial take.
Robyn Allan, a long-time Trans Mountain pipeline foe and former CEO at ICBC says Metro Vancouver’s record-high prices are a product of price-gouging on the part of fuel suppliers.
Speaking on CKNW’s The Lynda Steele Show, Allan argued that the underlying problem facing consumers is a market dominated by a few players who are keeping prices high.
“There’s not enough competition in the market, there’s too few of the suppliers and they have over the years developed a very severe habit of charging whatever the market can bear,” Allan argued.
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“It’s not because of crude oil prices, it’s not because refining costs have gone up. And there’s no supply problem, there is not a lack of supply in our domestic market place.”
To make that point, she argued that Burnaby’s Parkland refinery — the only such facility on the South Coast — has been stockpiling crude oil for “months” to service its refinery.
And she bolstered her point by pointing to data from the Port of Vancouver which shows tankers leaving the facility exporting more gasoline to the U.S. than bringing it in.
She claims that when oil prices cratered in 2014, dropping from more than $100 per barrel, suppliers kept their margins high, pocketing the difference — and leading to current price problems.
“That margin started to balloon and so instead of passing the benefit of lower prices onto the retail market, they kept a large portion of that for themselves. And we all kind of saw it, prices never really fell at the pump to where we thought they should,” she said.
LISTEN: Supply problem, not price gouging to blame for pain at the pump, says analyst
‘Land of magic and make believe’
Dan McTeague, senior petroleum analyst at Gasbuddy.com, says Allan’s theory doesn’t hold water.
“It’s an inconvenient truth for the Robyn Allans of this world, but the reality is I don’t work or operate in the land of magic and make believe,” he told Lynda Steele.
McTeague suggested that Allan was cherry picking her facts, focusing solely on the gasoline moving through the port of Vancouver.
“Yes, there is premium gasoline that is exported, about 5,000 barrels a day, representing maybe about 11 or 12 per cent of what Parkland produces,” McTeague said.
“But we are importing 35,000 barrels a day from the United States. Last time I checked, 35,000 minus 5,000 or 6,000, that’s 29,000 barrels a day that we need,” he said.
McTeague said he has long spoken about the lack of competition in the oil industry. But he said the root cause of the pain Metro Vancouver drivers are dealing with at the pump is a lack of supply, and a resulting reliance on foreign fuel that makes the province “price takers.”
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“The reality here is that we’ve painted ourselves into a corner. Higher demand, less opportunity, a constrained Trans Mountain pipeline, which she opposes, which would bring down the equivalent of building another refinery with 50,000 barrels of fuel,” he said.
“All those things are locked in.”
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