Canadian gas prices aren't so bad, industry expert insists

While Canadians complain about the soaring price of gasoline at the pumps, an oil industry spokesman says people in this country actually have it pretty good.

Peter Boag, testifying before a parliamentary committee on Tuesday, told MPs that fuel prices are lower in Canada than they are in every other Western country except the United States.

And the fact that Canadian gas prices jump up and down from day to day is actually a good sign, he said.

"We do understand Canadians' frustration with fuel price volatility in particular, but at the same time in our view that's the best evidence of a well-functioning, competitive market," said Boag, president of the Canadian Petroleum Product Institute.

His association represents Canadian fuel companies like Petro-Canada, Shell, Ultramar, Chevron, Husky and Imperial Oil.

"In our view, Canadians are well-served by a competitive marketplace and today they still pay the second-lowest price for fuel in the Western world," he said.

He was one of three petroleum industry experts testifying before the subcommittee on oil and gas and other energy prices. The committee is investigating the reasons behind the high prices of fuel in the country.

Don't blame refiners, retailers: experts

Following the lead of U.S. congressional hearings that began in the spring, MPs in Canada are studying how a barrel of crude oil could jump from roughly $70 to $140 US in a year. They also are examining why when oil prices fall, gasoline prices do not seem to drop as quickly.

"The high prices really bother Canadians," NDP committee member Peggy Nash said. "The oil companies are making huge profits when consumers are dinged at the pumps."

But Boag said the reasons for high fuel prices are complex, tied to both supply and demand, and he noted that the blame cannot be laid on refiners.

He said refining profits are down from a year ago because of the rising price of crude oil. He said the cost of refining is relatively stable, although environmental regulations can increase the price.

Jane Savage, representing gas station owners and other petroleum marketers, said retailers are also not seeing large profits from high gas prices.

"It's not the folks who are delivering fuel to Canadians all over that are making money," said Savage, president of the Canadian Independent Petroleum Marketers Association.

"At least 70 per cent of Canada's gas stations see no benefit from rising prices, but rather profits are declining as a result of increased credit card costs."

Rising diesel costs play a role

Savage partially blamed the high cost of fuel on a small concentration of refiners who set the prices that retailers have to pay for the gasoline they buy. She also blamed speculators — high-risk investors seeking short-term gains — and called on Canada's political leaders to increase oversight of the market and limit speculators from buying into oil markets, suggesting such a move would reduce oil prices.

She said Canada should consider having companies publish all inventory supplies on the internet, so that Canadians know exactly how much fuel is available and whether supplies are actually tight.

Boag said the price of diesel is rising dramatically because of demand in Europe, where people are driving more and more diesel cars. Meanwhile countries like China and India are demanding more diesel as their economies grow.

Independent MP André Arthur said the rising price of diesel is most troubling.

"The price of diesel affects every economic sector, because it affects public transportation, it affects the cost of goods that are transported," said Arthur.

Price hike before long weekends disputed

Boag disputed MPs' assertions that gas prices are staying high even though oil prices are dropping. He said gasoline prices are rising and dropping all the time.

Both Boag and Savage also disputed the assertion that gas prices rise before a long weekend, saying that is a consumer perception, not necessarily a reality. They said competition among retailers causes the prices to fluctuate more than anything.

Bloc Québécois MP Robert Vincent wondered how they could dismiss the findings of consumers, while not offering any real explanations for high gas prices.

"Why is it that consumers seem to have more knowledge than the people who work in the industry?" Vincent asked.

"Why is it that consumers can predict price increases, whereas you as the experts cannot explain these increases? How is it that consumers have an edge?"