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British Columbia No collusion, consultant tells inquiry into high B.C. gas prices

There is no evidence of collusion or other measures to fix gasoline prices in British Columbia, a public inquiry into why the prices in the province are among the highest in Canada has been told.

Economist Henry Kahwaty told the opening day of hearings in downtown Vancouver by the British Columbia Utilities Commission that a discussion on market prices might raise questions about whether entities have taken actions that have unduly elevated prices.

“To an economist, the question is, ‘Has anyone taken actions that restrict supply and, because they restricted supply, pushed up prices in the marketplace?’ " Mr. Kahwaty, appearing on behalf of Parkland Fuel Corp., told a three-person panel headed by commission chief executive David Morton.

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The answer, Mr. Kahwaty said, is No.

NDP Premier John Horgan ordered the inquiry in May as drivers in the Vancouver region were paying some of the highest gas prices in North America. The inquiry has a mandate to look at factors influencing gasoline and diesel prices in B.C. since 2015 and what the province could do to moderate fluctuations and increases.

But Mr. Kahwaty told the inquiry Wednesday that “common price movements themselves are not evidence of cartel conduct … The mere fact that you see common movements in retail prices is not evidence of collusive conduct.”

Parkland, which operates in North America and the Caribbean, is a key vendor of wholesale gasoline and diesel in B.C. The company, whose B.C. retail operations include Esso and Chevron stations, also owns a refinery in Burnaby and employs 600 people in the province.

The BC Liberal opposition has criticized the guidelines the NDP has set for the inquiry.

“John Horgan has banned the review from looking at the impact of NDP policies and taxation on the costs of fuel,” BC Liberal Leader Andrew Wilkinson said in a statement. “British Columbians deserve the full picture when it comes to why they are paying the highest gas prices in North America, not a sham review designed to distract from NDP taxes."

He said the government is rushing the inquiry, which should have the option to look at issues such as the NDP’s opposition to expanding the Trans Mountain pipeline from Alberta – a source of fuel for B.C.

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The inquiry will also be looking at margins for gasoline, including the difference between the amount a refiner pays for crude oil and other components and then charges its customers, and the difference between what a retailer pays and what it charges customers, excluding taxes.

Under the terms set by the government, the inquiry will not examine the impact of taxes on the price of gas.

Mr. Horgan defended that approach in Vancouver on Wednesday.

"Our policies aren’t excluded from public scrutiny. They’re published everywhere. You can find out what taxes are raised at the pumps and what those resources go towards," he told reporters.

“What’s not publicly available is why we would see a 40-cent increase in a litre of fuel over the course of a weekend. That’s not because of taxes. That’s not because of government policies. That’s because of some other external factors oftentimes mysteriously shrouded at boardrooms around the world.”

Mr. Horgan has asked the commission to report by Aug. 30 on the factors that affect wholesale and retail gas prices, in particular why refining margins are so much higher in the Vancouver region than in other parts of the country. In May, gas prices were about $1.70 a litre.

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High gasoline prices in the province have been linked to global markets, taxes on gasoline and limited refining capacity in the province, among other factors.

Much of the hearing Wednesday was taken up by a review of two previously released reports by consultants the Deetken Group, based in Vancouver, including one that found gasoline prices in B.C. have risen in line with land costs and credit-card processing fees.

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