Minister Greg Rickford – Competition Bureau Asked to Look into Gas Prices

Minister Greg Rickford speaking in Kenora on Gasoline Prices in Northwestern Ontario.
Minister Greg Rickford speaking in Kenora on Gasoline Prices in Northwestern Ontario.

Minister Greg Rickford speaking in Kenora on Gasoline Prices in Northwestern Ontario.
Minister Greg Rickford speaking in Kenora on Gasoline Prices in Northwestern Ontario.

KENORA – Greg Rickford, Minister of Energy, Northern Development and Mines is calling on the Competition Bureau to review gasoline and diesel retail prices in northwestern Ontario.

“Our Government for the People has followed through and taken steps to cut gas prices in Ontario. Now we need to make sure those savings are being passed on to consumers across the province,” said Minister Rickford. “

“Part of our mandate was to take action on gas prices and to bring much-needed relief at the pumps. We made a promise to do so, and we kept that promise.” said the Minister.

“Today, people all across the province are seeing savings that are in part due to our scrapping of the cap-and-trade carbon tax…people everywhere, except here in northwestern Ontario. Why are we paying nearly 40% more for gas than the rest of Ontario?”, asked Minister Rickford. “I want answers for the people of Kenora. That’s why I have asked the federal Competition Bureau to undertake a full review of gasoline and diesel retail pricing practices in northwestern Ontario.”

“We work too hard to provide for our families, and contribute too much to Ontario’s economy to be punished like this. The resources we develop for Ontario are too important to leave frontline workers paying more than $1.35/L to get to work. I’m going to keep pressing for answers and demanding results until we see the same benefits of lower gas prices here that we see elsewhere in Ontario”.

The government eliminated the cap-and-trade carbon tax of 4.3 cents per litre off the wholesale price of gasoline and 5.0 cents per litre off the wholesale price of diesel fuel.

Earlier this September, wholesalers began removing these costs from their prices and in most markets across Ontario, retail prices have decreased with this change. However, in northwestern Ontario, particularly in Kenora, Fort Frances, Dryden and Thunder Bay, these savings do not appear to have been shared with consumers.

“We’re seeing anomalies in northwestern Ontario retail fuel prices which may be evidence of a lack of competitive behaviour,” said Minister Rickford. “Given these observations, I am requesting that the Competition Bureau undertake a full review of gasoline and diesel retail pricing practices in northwestern Ontario.”

The Minister in a letter to the competition bureau wrote, “The Ministry of Energy, Northern Development and Mines monitors transportation fuel prices at both the wholesale and retail level on an ongoing basis. Starting on September 7, 2018, Ontario’s wholesalers began to remove the cap-and-trade carbon tax and my ministry has been able to identify a corresponding decrease in the wholesale price of transportation fuels across the province. In particular, the price difference between Ontario’s wholesale prices and North American benchmarks (e.g., New York Harbour, Edmonton) decreased in alignment with the removal of cap-and­ trade carbon tax costs. This decrease has persisted since early September 2018.

“In a competitive market, our expectation is that local competition should ensure lower wholesale costs are passed onto consumers through lower retail prices, rather than being retained by retailers (i.e., increasing their retail margin).

“In most retail fuel markets across Ontario, retail prices decreased to reflect the removal of cap-and-trade carbon tax costs from wholesale prices and my ministry did not observe any significant change in retail margins. However, in certain markets such as Thunder Bay, Kenora, Fort Frances and Dryden in northwestern Ontario, the savings passed along at the wholesale level do not appear to have been incorporated in retail prices and shared with consumers.

“For example, using Kent Group Ltd.’s data for gasoline prices, Thunder Bay’s average monthly wholesale gasoline price decreased from 91.8 cents per litre in August 2018 to 84.5 cents per litre in October. The corresponding retail gasoline price decreased from an average of 145.4 cents per litre in August to 142.3 cents per litre in October. The result was the average retail margin in Thunder Bay increased from 12.2 cents per litre in August to 16.5 cents per litre in October. A retail margin of 16.5 cents per litre in Thunder Bay is well above the retail margin in other major gasoline markets in northern Ontario (e.g., ranging in October 2018 from 6.2 cents per litre in North Bay to 14.0 cents per litre in Timmins).

“These anomalies in northwestern Ontario retail fuel prices may be evidence of a lack of competitive behaviour. Given these observations, I request the Competition Bureau undertake a full review of gasoline and diesel retail pricing practices in northwestern Ontario.”

Letter to Competition Bureau

Rickford Letter to Competit… by on Scribd