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MP-Report

High gas prices not a gas

We all feel the frustration when local gas prices take a big jump, and I understand why people write to me questioning whether or not there is fair competition in the marketplace. 
 
The federal government has two areas of responsibility when it comes to the price of gas: ensuring fair competition in the marketplace and remitting federal taxes on the price of gasoline.
 
In the first instance, the federal government ensures fair competition in the marketplace through the Competition Bureau. 
 
Since 1990, the Competition Bureau has conducted six major investigations into allegations of price collusion in the gasoline industry and while some individual retailers have been fined, most recently in 2010 in Quebec, it has concluded that periodic price increases are a result of market forces such as supply and demand and rising crude oil prices.
 
Anyone wishing to file a complaint regarding gas prices, or anyone with evidence of collusion among retailers, can call 1-800-348-5358 or submit a complaint to the Competition Bureau at www.competitionbureau.gc.ca.
 
The second area of federal jurisdiction is taxes, specifically the GST and excise tax.
 
The GST is 5%, which our government reduced from 7% shortly after becoming the government. 
 
This major tax reduction continues to help Canadians deal with the cost of living and provides permanent, long-term relief to Canadian consumers across a broad range of purchases, including gasoline. 
 
The federal excise tax on gas, which is 10 cents a litre for regular fuel and 4 cents a litre for diesel, has been unchanged since 1995 and 1987 respectively.   These rates do not vary with the retail price of fuel. 
 
Revenues from federal excise taxes go to the Consolidated Revenue Fund and are used to support a broad range of federal programs for all Canadians, such as health care, post-secondary education, seniors’ benefits, infrastructure and national defence.
 
Taxes on fuel are also remitted at the provincial and, in some cases, at the municipal level, which is why prices vary between provinces and even within provinces.   In British Columbia for instance, we pay federal and provincial taxes, a carbon tax, and in some cities like Vancouver and Victoria, municipal transit taxes. 
 
The price of gas has led to a number of constituents asking the federal government to regulate the industry. 
 
Regulation of the gas industry is strictly a provincial responsibility and while some provinces have opted to regulate gasoline and other fuel prices, this approach has not resulted in lowered prices for consumers in these jurisdictions. Provincial price regulations are generally introduced to provide more stable prices.
 
This brings us to the behavior in the local market.
 
Years ago my wife Cindy and I used to operate a gas station in Edmonton.  Then, as now, the price we pay for gasoline at our local service station can vary quite a bit from city to city. Other than taxes, price differences between cities across Canada depend on other key factors including: competition and consumer choice, transportation costs to bring the gas to its destination, the amount sold, and the type and location of stations.
 
I’ve made a few inquiries and have been told that the Kelowna market is considered to be a market with less competition, higher transportation costs, and one without the competitive benefit of big box store gas retailers like the Costco in Kamloops.  These factors mean we pay more than other BC cities, including neighbouring cities.
 
According to MJ Ervin & Associates the price breakdown of a litre of gas is represented this way: about half of the price is determined by the price of crude; 15 per cent by the refiner mark up; 5 per cent is the retail marketers mark up; and roughly 31 per cent is taxes.
 
Like coffee, gold or pork bellies, gasoline is a commodity and the wholesale price reacts to a number of factors including changes in world crude oil prices, availability of supply to meet demand, local competition among retailers, seasonal demand, i.e. the annual spike in demand for gasoline during the summer driving season, and inventory levels.
 
In recent years, the combination of all of these factors has led to some of the highest prices for crude oil and gasoline in the last 10 years. They have also led to frequent changes in the price that we pay at the pump.
 
The federal government will continue to monitor fluctuating prices to ensure they do not exceed normal reaction to market forces. 
 
While we don’t pay the lowest prices for gasoline worldwide, we do benefit from a reliable supply, which is important considering how much we depend on gasoline and other fuels for our day to day activities.
 
 
Ron Cannan is the Member of Parliament for Kelowna-Lake Country and welcomes your feedback at [email protected].  Information on local announcements and federal government programs can be found at www.cannan.ca.
 


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About the Author

The Honourable Ron Cannan was first elected as Member of Parliament for Kelowna-Lake Country in January, 2006. He was subsequently elected in the 2008 and 2011 federal elections. He is a member of the Conservative Caucus.

On September 13th, 2012 Ron was summoned to be a member of the Queen’s Privy Council for Canada and will provide advice to the Government as a member of the Priorities and Planning Sub-Committee on Government Administration.

Ron successfully uses his experience and knowledge as a long-time Kelowna City Councillor and regional government representative to be an effective and enthusiastic champion for his riding and his constituents.

His greatest satisfaction comes from helping local organizations and citizens obtain the support they require from Ottawa. 

He is also dedicated to doing what it takes to ensure that the growing and vibrant communities in his riding continue to thrive and prosper.

He is proud of the partnership and cooperation between federal, provincial and municipal governments which have resulted in significant infrastructure projects including upgrades to Highway 97, expansion of the Kelowna International Airport, a new horticulture strategy for fruit growers, obtaining a full service passport office for Kelowna and addressing critical economic issues such as labour skills shortages.

He works closely with the local Chambers of Commerce and once a year arranges meetings for the Chamber with Cabinet Ministers and senior policy staff in Ottawa to move forward important local issues such as crime prevention and labour skills shortages.

He is also an ardent champion for important community initiatives including homelessness, mental health, women’s resources, and support of arts and culture.

On Parliament Hill, Ron has been a member of the Standing Committee on International Trade since 2006 supporting initiatives which will broaden the economic opportunities for local businesses and businesses Canada-wide.

In previous parliamentary sessions Ron has been a member of the Standing Committee for Government Operations and Estimates, Veteran’s Affairs, Human Resources and Social Development, the Scrutiny of Regulations Committee, and the Standing Committee for Fisheries and Oceans.

Ron is also involved in a variety of inter-parliamentary organizations: he is Vice Chair of the Canada-US Inter-Parliamentary Group, and a member of the Canada-Taiwan Friendship group.

As Chair of the Conservative Wine Caucus, Ron works with his colleagues across the country to promote the wine regions of Canada.  Ron tabled Motion 218(formerly Motion 601) which supports direct to consumer purchasing of Canadian wine. His motion became Bill C-311, sponsored by MP Dan Albas, seconded by Ron, which was passed into law on June 28th, 2012.

Prior to entering politics, Ron developed a diverse business background as a small business owner and had several years experience in marketing and sales management working with corporations including Coca-Cola, Costco and Corus Entertainment.
 

Very active in his community, Ron has been a Director for both the Central Okanagan Regional District and the Central Okanagan Hospital Board. Ron also served on the Okanagan University College Access to Training Advisory Board, the Glenmore Elementary School Parents Advisory Council, and the Kelowna Christian School Fund Raising Committee. He was co-founder of the Okanagan Volunteer Festival. Currently Ron is a member of the Sunrise Rotary Club of Kelowna and, along with his wife Cindy, was the honorary Chair of the 2012 Canadian Cancer Society Daffodil Ball.

Ron lives a family-oriented and active lifestyle with his wife Cindy. He is the proud father of three daughters and grandfather to three grandsons. His hobbies include music and sports.



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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