SOMBA K'E/YELLOWKNIFE
Government regulation of gas prices in the territory would limit the volatility of prices but likely not lower them, according to Jason Parent of The Kent Group.
Joe Reid pumps gas into his Subaru at the Yellowknife Co-op gas bar Thursday. A southern gas expert says government regulation of gas prices likely won't don't much to lower them. - Simon Whitehouse/NNSL photo
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"If you look at the data (residents in regulated provinces) are essentially paying on average as much or more than other people in Canada when you back out taxes and things like that," said Parent, a senior associate with the consulting firm for the petroleum industry.
Overhead and administrative costs are also needed to regulate gas prices and those expenses can be costly, he added.
Parent's comments come on the heels of a motion, passed in the legislative assembly, to have the GNWT investigate and evaluate the possibility of regulating gasoline prices in the territory. The initiative was spearheaded by Robert Hawkins, MLA Yellowknife Centre, who said Northerners are being "held hostage" by prices set by big oil companies.
Currently, gas prices are regulated in five provinces – Prince Edward Island, Newfoundland and Labrador, Nova Scotia, New Brunswick and Quebec. In most cases, the regulated provinces set a maximum retail price, which is changed about every two weeks.
Although it sounds good, Parent said the system can sometimes limit competition between the retailers, causing consumers to pay more than they would in other markets.
"If (the retailer) knows the prices are going to be set at the ceiling then there is no motivation for guys to price lower than that and damage the margin," he said.
Yellowknife resident Randy Freeman said he is happy to learn the government is looking into the situation. Freeman, a longtime Co-op member and former board member, spoke to Yellowknifer last month about his concern over the Co-op's pricing practises.
"We're essentially being screwed on gas prices in Yellowknife and something has to be done," Freeman said. "I still stand by my original argument that it is the co-op that is causing the problems in town."
The Yellowknife Co-op, he said, won't compete with other retailers on gas prices and the board's policy runs contrary to what the company stands for: fair prices and great service.
"Unless the co-op changes its policy, which is unlikely, then prices will remain high in Yellowknife. So I guess the next best thing that could happen or should happen would be the government stepping in and regulating prices," Freeman said Wednesday.
Ben Walker Sr., general manager of the Yellowknife Co-op, declined to comment.
Meanwhile, Gastown owner Roy Ferrier said he's not concerned about the recent push to regulate gas prices.
"What the government wants to do is up to the government," he said. "I'm just a gas owner. I get a price and when the prices went down, my prices went down."
- with files from Danielle Sachs
