How Tories Dumped Your Interests at the Pump

Oil is cheaper by half. So why don't feds try and deliver savings to drivers?

By Mitchell Anderson 6 Oct 2015 | TheTyee.ca

Mitchell Anderson is a freelance writer based in Vancouver and a frequent contributor to The Tyee. Find his previous Tyee columns here.

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Oil prices have plunged by 50 per cent since last year, but you would never know that looking at what people are paying at the pump. What gives?

Don't ask the Conservatives. They halted the department in charge of telling us how much their Big Oil backers are profiting from those market-defying high prices.

When will the feds return to the business of revealing just how much we are getting screwed? The day this election is over, they say.

It's a prime example of preemptory political damage control, and here are the details:

There is a quaint term in the oil refining business called the "crack spread." This is the profit margin between the cost of buying crude oil and the retail price of produced gasoline. The "crack spread" keeps widening as Canadian consumers shell out almost as much per litre even though crude oil prices are roughly half what they were a year ago.

According to research by economist Robyn Allan, this yardstick of gas pump profit margins ballooned by 87 per cent above the 14-year industry average of 17.7 cents. Canadians buy over 43 billion litres of gas per year, so this year's yawning crack spread adds up to big money for refiners. Canadians are on track to shell out over $5 billion in extra money to the oil industry in 2015 due to this apparent price-gouging at the pumps.

And what is the Harper government doing to protect Canadian consumers from such predatory profiteering? Making sure you don't hear about it. Natural Resources Canada (NRCan) regularly publishes their Fuel Focus report every two weeks detailing gas prices and refinery margins. That was until last summer.

NRCan mysteriously halted releasing fuel prices on July 24 -- a week before the election writ was dropped. When Allan asked what happened to the normally-publicly-available data she was told that publication of Fuel Focus will resume after Oct. 19.

Neil MacDonald of the CBC followed up on Allan's story and was similarly flummoxed. He contacted departmental spokeswoman Caitlin Workman who stated, "During the election period, Natural Resources Canada is ‎minimizing the posting of new information online. For this reason, the posting of the department's market commentary has been temporarily suspended." ‎

Strange. The parts of the public service publishing information potentially beneficial to the Conservatives have hardly gone into caretaker mode during the election. Stats Canada reports on whether Canada is in deficit have been put in high rotation by the Tories on the campaign trail.

When do 'market forces' favour the little guy?

Just weeks before Canadians decide whether Stephen Harper will remain prime minister, his minions were beavering away behind closed doors to eke out a last minute Trans Pacific Partnership deal. And while Canadians are being forced to fork over more than $5 billion in windfall profits by his friends in the refining sector, Mr. Harper seems strangely silent.

For years Harper has been railing against the bogey-man of a "job-killing" carbon tax he was alleging the NDP was poised to inflict on Canadians. Yet the yawning margins now enjoyed by the refining industry (over 30 cents per litre according to Allan) are fully four times the amount of the B.C. carbon tax.

And unlike what is essentially a $5 billion nonconsensual subsidy to the ailing petroleum sector, B.C.'s innovative carbon tax is designed to be revenue neutral. In fact it has resulted in $760 million in net tax reductions since it was introduced in 2008. Most importantly, B.C.'s fuel consumption dropped by 16 per cent while it rose everywhere else in the country.

Regulator kept on leash

What could the "Harper Government" do to protect consumers? The Canadian Competition Bureau has the important mandate to investigate potential criminal collusion in the marketplace. They have sweeping powers to compel testimony under oath and order the production of documents and records.

Back in 2006 the competition bureau launched a major investigation into gasoline price fixing in Quebec. Using wiretaps and search warrants, they eventually laid charges against 38 individuals and 14 companies with fines totalling $15 million.

And what is the current competition priority of the Harper government? Last December, then industry minister James Moore summoned the national media to an Etobicoke Toys 'R' Us store and announced changes to the Competition Act to curb potential price gaps between products sold in the U.S. and Canada. The Competition Bureau was to be granted to sweeping new powers and $5 million in earmarked funding for this regulatory goose chase.

Mel Fruitman of the Consumer Association of Canada called this "a feel-good announcement that will probably not have any effect at all." Former Tory minister Perrin Beatty, now president of the Canadian Chamber of Commerce, also dismissed the legislation as "cross-border Kabuki Theatre" that would not have any significant effect on Canadian prices.

Protection racket

If Harper really cared about Canadian consumers, why is the all-powerful PMO not instructing the Competition Bureau to make gas prices a top priority? Why isn't the industry minister making a price policy announcement from a suburban gas station? After all, Canadians are apparently being soaked for over $5 billion this year in extraordinary refinery margins.

Why isn't that an election issue?

The answer goes to recurring question of credibility for Harper. Does he represent hard working Canadian families or his friends in the oil industry? Don't expect the Harper government to do anything to cross the all powerful petroleum sector. Action (and inaction) speaks louder than words. With only two weeks left till voting day, it seems our tough talking PM is quite content for Canadian consumers to pay too much at the pump to prop up his favourite industry's slumping fortunes.  [Tyee]

Read more: Politics, Election 2015

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