Abbotsford drivers getting ‘gouged’ at pump: Mayor

Industry analyst says price gaps between municipalities common, result of market forces.

Abbotsford Mayor Henry Braun says drivers are getting 'gouged' at the pumps.

Abbotsford Mayor Henry Braun says drivers are getting 'gouged' at the pumps.

Abbotsford residents are being “gouged” at local gas pumps by the fuel companies, according to Mayor Henry Braun.

But a petroleum industry expert says economics and competition may be to blame for local drivers paying higher before-tax prices.

In November, Braun signed off on a letter that called on the provincial government to lobby the federal government for tighter competition rules.

“As oil prices continue to remain low, it is clear that consumers in Abbotsford are being taken advantage [of] by the petroleum retailers as their pocketbooks are being gouged at the pumps,” said the letter, which was crafted by staff, signed by Braun and sent to Finance Minister, and Abbotsford West MLA, Mike de Jong.

Taxes on gas in Abbotsford are 11 cents/litre less than in Metro Vancouver, but prices in the two neighbouring areas were level last fall, when the letter was sent.

Referencing the tax disparity, the letter states “this situation suggests predatory pricing tactics are currently being utilized by the large petroleum retailers.”

It said council finds the “situation completely unacceptable” and requested the province lobby the federal government to amend the Competition Act and consider expanding the definition of predatory pricing and introducing new corporate conspiracy penalties.

De Jong’s office did not respond to a request for comment by The News by press time.

Since the letter was sent on Nov. 22, 2016, a gap between Metro gas prices and those in Abbotsford has been re-established. However, the difference in prices has rarely been as much as 11 cents.

Instead, a gap of around eight cents has been common, although larger and smaller differences have also been seen. Although prices rise at about the same rate in the two jurisdictions, they have generally fallen earlier in Vancouver, resulting in occasional narrower gaps in prices.

As of Tuesday, the average Abbotsford price was between $1.22/litre and $1.24, while the average in Vancouver was about $1.31. In Langley, which is in Metro Vancouver, some locations had prices closer to $1.28.

Braun, whose feelings haven’t changed since the letter was written, said he hasn’t heard back from the province. He said the letter was sent to the province, rather than directly to the federal government, because he felt any lobbying would be harder to ignore if it came from the province.

An official for the Canadian Fuels Association, a trade group for the country’s gas sellers, directed The News to Michael Ervin, of the Kent Group, a Canadian consultancy that focuses on the petroleum industry.

“It’s not unusual for markets to have different prices,” said Ervin, who has studied the issue for 30 years. He said several factors can cause price differences between neighbouring markets, the biggest being the amount of fuel sold by local gas stations; locations that sell more gas can apply a smaller mark-up and still make money, while less-busy stations must sell fuel at a higher price to break even.

Transportation costs also likely boost the price a little, since gas sold in Abbotsford comes from the Burnaby terminal.

“At the end of the day, selling gas is a very competitive business, despite what the perception of the consumer sometimes is,” he said.