Posthaste: Ever wonder why B.C. gas prices are so high? The answer might surprise you

financialpost.com:

Ever pull into a gas station in British Columbia and wince at the posted price?

You’re not alone; since 2015, prices at the pumps in this western province have soared way above the national average. By 2023 you might have been paying 20 to 35 cents a litre more than you would in the rest of the country.

The good news is there is relief on the horizon; the bad news is how we got there in the first place.

The gas-price problem has been so bad that in 2019 the British Columbia Utilities Commission launched an investigation and concluded that price fixing was to blame.

But according to a report out this week from the C.D. Howe Institute, that probe was off the mark and the real culprit was an “invisible bottleneck” in the Trans Mountain pipeline.

“In diagnosing the issue of high gasoline prices, the B.C. government has mistakenly identified a case of insufficient pipeline infrastructure as an abuse of market power,” said G. Kent Fellows in his report.

Refined products like gasoline travel to British Columbia from Edmonton via the Trans Mountain pipeline, but since 2015 a “big squeeze” in this conduit has been responsible for B.C.’s pain at the pumps, he says.

As Fellows explains, a rule change that year by the National Energy Board, designed to stop producers from gaming the pipeline system, resulted in an increase in crude oil shipments and a reduction in refined product shipments.

A big reduction — the study says refined product shipments were basically cut in half, falling from 10,000 cubic metres a day to 5,000.

That meant gas wholesalers in British Columbia’s lower mainland had to find other ways to ship the gas they needed, and rail transport that is more expensive than pipeline was used to fill the gap.

The squeeze