Article content

This is a re-post of an article published in July, when Vancouver gas prices were breaking records with the then-exorbitant rate of $1.50 per litre. Over the weekend, Metro Vancouver gas prices hit an all-time record of $1.64, with no conceivable end in sight.

And the B.C. metropolis appears to be alone in paying through the nose for petroleum. In Montreal, prices are hovering around $1.30. In Toronto, prices are as low as $1.14. In Edmonton, the place of origin for much of Vancouver’s gasoline, it’s possible to fill up for $1.08.

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or Why Vancouver is still getting utterly hosed on gas prices Back to video

Below, a quick guide to how Vancouver wound up paying some of the highest gas prices in the hemisphere.

Vancouver’s gap between oil prices and gas prices is extraordinary — and it keeps getting worse

There’s something in the oil industry called “refinery margin.” It’s a measure of the price difference between what a refinery sells and what it paid for raw materials. So, if a refinery buys $10 of oil and turns it into $12 of diesel, it has a refinery margin of 20 per cent. A recent report from Vancouver’s Navius Research contained a staggering factoid: Since 2008, the Vancouver-area refinery margin had exploded from 13 to 35 per cent. In the rest of the country, meanwhile, margins were less than 18 per cent. The Navius report speculates that this is due to a lack of competition: With only a handful of fuel providers in the region, they’re able to tacitly allow prices to artificially rise. “I’ve seen no evidence that this has anything to do with a lack of competition at the refinery level,” said Jason Parent, a vice president with Kent Group, the petroleum analytics firm that provided the Navius data on refinery margin. Parent cautioned against the assumption that a high refining margin automatically means higher profits. All manner of costs, from transportation expenses to regulatory compliance, can swell a refinery margin. Jennifer Winter, an energy economist at the University of Calgary, was also skeptical that Vancouver’s prices could be attributed to malice. “A large refining margin is usually a function of transportation constraints rather than a deliberate exercise of market power,” she said, adding that plenty of Canadian cities rely on small numbers of fuel providers without their refinery margins skyrocketing.