Gas and political indigestion - The Orca

Gas and political indigestion

Rob Shaw 2

Rob Shaw: Once an election promise, the NDP find themselves in a corner on gas prices – and with Alberta promising relief, the pressure will only increase.

Premier John Horgan is feeling the political heat over record-high gas prices, but he’s ruled out cutting taxes and capping the price at the pump, so the only solutions left available are going to be complicated and difficult.

Horgan and Energy Minister Bruce Ralston have both shot down the idea of cutting BC’s fuel tax, or the carbon tax, which is set to rise another one cent per litre April 1.

“I do understand that people when they look at almost $2 a litre for gasoline now they immediately say, how can we reduce this, and taxation is a part of the increase — one cent — but an 18 cent-a-litre increase overnight has everything to do with international instability and, of course, the events unfolding in Ukraine today,” Horgan said Thursday, as prices jumped in Metro Vancouver.

His prediction?

“Unfortunately, until such time as we get stability in the international marketplace, our prices are going to continue to be volatile.”

BC’s fuel and carbon tax also contribute more than $3 billion annually to the budget, which is not revenue the province wants to imperil at a time when it’s projecting a more than $5 billion deficit.

“It may be easy for politicians to declare that taxes are the problem,” said Horgan.

“Those taxes go to building our roads, to providing the transit, to making sure that our infrastructure is as modern as it can be and having come through the atmospheric river this past fall, I think people understand better than in the past how fragile our infrastructure is and how important it is to make those investments, and carbon pricing and the gas taxes are part of that.”

Fair enough.

But the Horgan government has long promised to get tough against oil and gas companies “gouging” BC motorists with an unexplained 13 cents a litre markup identified in 2019 by the BC Utilities Commission. Doing nothing now is an option fraught with political risk.

Horgan and Ralston have sought refuge in some sort of upcoming report by the utilities commission that will explore options to better regulate the gasoline marketplace in BC.

But the fact that the province has never even mentioned this report until now should tell you something. It will undoubtedly be enormously complex, as previous commission reports have been into oil and gas pricing. It will take months for the government to analyze the work, and many more to prepare legislation if it decides to go that route.

Also, dramatically intervening in the private marketplace is not something that will necessarily work in a province where the gas distribution and retail is controlled by a small number of companies with little competition.

Unless the Horgan government plans draconian legislation to force companies to divest their assets to create more competition, how else does it intend to change the market?

Any move in that direction would get challenged in court by uncooperative and arrogant oil and gas companies that have already fought the Horgan government’s every move on investigating gas and forcing disclosure to the commission about private pricing regimes.

“Gasoline is a free market and it is why we’ve brought forward transparency legislation, to ensure that that free market didn’t take advantage of consumers by gouging at the pumps when there was an opportunity to do that,” said Horgan.

The political pressure will only increase when Alberta unveils its plan to provide consumer relief to gas prices this week.

“Help is on the way,” said Premier Jason Kenney, who has asked his finance minister “to come forward quickly with a plan to provide consumer relief for the growing gasoline prices.”

“We want to make sure that as the Alberta treasury receives additional royalties from these higher prices that some of that is passed on to consumers,” he added.

Who knows what Alberta will do. But gas there is still only in the mid-$1.50s. Lowering it further will make British Columbians envious, and turn up the heat on the BC government. Unfortunately for Horgan, there’s no easy options left for him to respond.

Rob Shaw has spent more than 13 years covering BC politics, now reporting for CHEK News and writing for The Orca. He is the co-author of the national best-selling book A Matter of Confidence, and a regular guest on CBC Radio.