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Northern Ontario NDP MPPs continue to push for regulated gas prices

Northern Opposition members say the party’s Fairness in Petroleum Products Pricing Act would ensure lower prices, but the Energy Ministry spokesperson and a petroleum analyst say regulating pricing actually leads to higher prices
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With the high price of gasoline a disincentive to living in Northern Ontario, a collection of NDP MPPs is continuing their collective push for the Ford government to do something about it. 

“If you’re in a locked market like Timmins is and Northern Ontario is overall, you’re often paying more for gas simply because they can,” Timmins MPP Gilles Bisson told Sudbury.com. “It’s as simple as that.”

Bisson introduced the Fairness in Petroleum Products Pricing Act in 2018 to combat price discrepancies between gas stations across the province, but the motion failed to reach the finish line.

Nickel Belt NDP MPP France Gélinas has been advocating against the practice of what she refers to as “gouging” at Northern Ontario gas pumps for the better part of a decade and said earlier this week that she remains hopeful that some change will still come. 

“The industry has shown that they do price gouging whenever they can,” Gélinas said. “They sell at what the market can bear, and in Sudbury, because a lot of the mines are far away and people have to drive lots to get to work, they need more gas to get an income, therefore they will pay and it’s wrong.”

The NDP’s bill would fix the maximum price of fuels so they are the same across the province, with changes made on a weekly basis by factoring crude oil value, the cost of refining, transportation and room for profit. 

“These are companies,” Bisson said. “They’ve got to make money, they’ve got to make a return on investment.”

“You cannot control the global market … but once it starts to be in Ontario … distributed and sold, then the provincial government can regulate it,” Gélinas said, pointing to price discrepancies between pumps as a result of “the opportunity to make a lot of money — it’s as simple as that.”

Although the proposal would establish weekly maximum fixed prices across the province, Gélinas said they’re open to the idea of having two prices to accommodate for transportation costs — one for urban centres and another for places farther away from distribution hubs. 

However, she clarified that the resulting price difference shouldn’t be as significant as what is seen at the pumps today.

“The trucks that are on the road are but a small cost compared to everything else that goes into extracting, refining, distributing and selling gas,” she said.

It wouldn’t be out of the ordinary for the province to regulate prices at the pumps, Bisson said, noting that the same as with natural gas and hydro, it’s a necessity for a lot of people whose hands are tied in purchasing it. 

“There are a lot of things that are regulated and for good reason, because if you didn’t you’d have these crazy, wild swings of prices depending on where you live,” he said. “I would never argue to regulate the price of a Nintendo … but gas, we have no choice.”

Most of the people living in Nickel Belt can certainly relate to this notion, Gélinas said, citing vehicle ownership as a necessity for the majority of residents.

“When I’m at home, I would wait for the bus a very long time because there is no bus where I live,” she said with a chuckle. 

“In places where we have no choice, to let an industry that has a history of extreme profit and gouging to gouge people that have no choice, this is wrong. There’s a role for government to play to make sure that the industry is healthy and makes healthy profits — nobody has a problem with this — but that the industry gouges people because we have no options. The government has a role to play.”

Last year, the NetNewsLedger reported that Premier Doug Ford pledged during a news conference in Thunder Bay that the government would “get to the bottom” of gas price discrepancies across the province, and said, “it’s absolutely unacceptable people are paying 20 or 30 percent more in Thunder Bay, Kenora and other regions.”

Sudbury.com reached out to Ford’s office on Thursday and received a written response from Ministry of Energy spokesperson Palmer Lockridge asserting the NDP’s plan would not work.

“Thanks to an analysis by Ontario’s independent regulator, the Ontario Energy Board, we know that gas regulation in other provinces, similar to what the NDP have proposed, causes higher prices than competitive, market-driven approaches like we have here in Ontario,” Lockridge wrote. 

Further, Lockridge noted that the province moved to cut fuel prices by taking the cap-and-trade carbon tax off the price of fuels in 2018, which resulted in a savings of approximately 4.3 cents per litre of gas and five cents per litre of diesel. 

“However, we know that our government’s work to lower gasoline prices has been offset by the federal government’s carbon tax,” he wrote. “While we accept the court’s ruling that the federal carbon tax is constitutional, the fact remains that it is adding nearly nine cents to every litre of gas Ontarians use today, and that the federal government intends for this extra tax to reach nearly 38 cents per litre this decade.”

The federal carbon tax is intended as a disincentive against using carbon-emitting products such as fossil fuels, but Gélinas said that as it stands today, many Nickel Belt residents still have no other choice but to purchase fuel to power the vehicles they depend on.

“When the Ford government came into government, the first thing they did was rip out the few charging stations we had for eclectic vehicles and cancel pretty much all of the subsidies for electric vehicles,” she said. 

“I have no problem using the money we make out of the carbon tax to help northerners who have no choice make the switch.”

Gas Buddy petroleum analyst weighs in

“Politicians are always thinking to control something that maybe they can’t fully understand, but that’s just life, especially when constituents start to notice prices are up,” Patrick De Haan told Sudbury.com by phone earlier this week. 

The senior petroleum analyst for GasBuddy.com noted that the state of Hawaii capped pre-tax wholesale gasoline prices in 2005 only to reverse that decision the following year.

“Inherently, getting in the way of a well-working market is ill-advised because it’ll have repercussions,” De Haan said. 

“I think that while those politicians may be well-intended, it would be ill-advised to try and control a market-based commodity. I think there will be ripple effects. They may not be evident immediately, but over time it will become evident if it’s a negative move.”

Gas prices are determined first and foremost by the price of crude oil, which he said is currently at a seven-year high. Crude oil is traded in U.S. dollars, so the weak Canadian dollar also factors in. 

“If Canada’s dollar was as strong as it was to the U.S. dollar in 2008, I estimate that average prices in Canada would be 25 cents a litre lower than it is today,” he said. 

Other fixed costs follow such as taxation, and De Haan said the “smallest portion of gas prices are the station’s margin, which can vary but is always historically within the smallest of factors.”

“Generally, stations almost always, evidenced by the fact that prices plummeted last year, pass along the savings, so it seems like politicians are eager to control something that’s a market force.”

There may be a solution to market-to-market price discrepancies, but De Haan said he’s uncertain as to what it might be. 

Tyler Clarke covers city hall and political affairs for Sudbury.com.