FACE TO FACE: Gas prices go up and down in lockstep - is collusion the reason?
It's easy to imagine inflexible class warriors such as my debating partner using crayons to do their economic 'rithmetic. Got a difficult business problem to work out? Forget the calculator! They think they can figure out the toughest questions with the crudest tools possible, in no small part because they already know the answer: Big Business is always to blame.
And so it is that my colleague ignores the facts, ignores countless studies and ignores common sense when he predictably claims gasoline companies are gouging consumers.
The Competition Bureau of Canada receives many such complaints a year from motorists who think it's fishy that all the big service stations seem to raise and lower their prices in unison. Most often, however, the bureau finds no evidence to support the charges. The recent exception was in 2008 in Quebec, where four companies were found to have colluded. Otherwise, the rise and fall is all due to market forces.
Nevertheless, the ill-founded complaints are so common that the bureau has had to devote a section of its website to instructing the public about the issue. Funny thing, though: There's nothing similar about, for example, the fact big supermarkets seem to raise and lower their prices on tomatoes, oranges and lettuce in relative unison. Here, the public understands how natural economic and political forces affect the market for produce. With gasoline, however, anti-oil-company prejudice blinds them to reality.
Regrettably, the complainants' hue and cry sometimes reaches such a level that weak-willed politicians are forced to set up expensive new bureaucracies to control prices. All four of the Atlantic provinces have such departments and all essentially do nothing except suck up tax revenue; force marginal, rural gas stations out of business; and inject costly inefficiencies into the marketplace. The Atlantic Institute for Market Studies figures the interference has cost consumers $155 million.
And, oh yes, the bureaus don't lead to lower prices, either. A typical comparison: Last weekend, gas was selling in Halifax, Nova Scotia - a province that has had gas-price regulation since 2006 - for 121.3 cents a litre, an insignificant three cents cheaper than in the Tri-Cities. And, even then, the difference can be attributed to our high regional taxes.
An award-winning journalist, a writer with Edmonton's Report Magazine and Toronto's Catholic Insight magazine, and co-host of RoadkillRadio.com, Terry O'Neill is a long-time Coquitlam resident who sits on the board of the Coquitlam Foundation and chairs the finance commitee of St. Joseph's Catholic parish.
