IN THE NEWS: Government Taken To Task for Fiddling While Gas Prices Heat Up

Government taken to task for fiddling while gas prices heat up

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OTTAWA (CP) _ Opposition parties demanded that the government take action to reign in gas prices Thursday after a study from a left-wing think tank charged that Canadians may be paying anywhere from 15 cents to 27 cents a litre more for gas than justified.

But Industry Minister Maxime Bernier said that while he agreed the price of gas ``is high right now,'' he said any attempt to control prices would be counterproductive.

``If you look at all the countries in the world, when you try to control prices it doesn't work,'' he said. ``What we have now is a problem with the inventory and the stock problem in the U.S. ... I think in the near future the price will go down.''

The demands for action follows an analysis by the Canadian Centre for Policy Alternatives that concludes the industry has artificially inflated prices since the temporary supply shortage stemming from Hurricane Katrina in the fall of 2005 showed that consumers were willing to pay much higher prices for gas.

The study says ever since Katrina, Canadians and Americans have been paying much more at the pump than would be justified by the cost of crude oil, production and profit margins that industry earned prior to the Louisiana hurricane.

``Frankly, I think in Canada there was psychological barrier of $1 a litre, and the industry probably felt there would be real consumer resistance to pushing prices beyond that. What they discovered is that the market will in fact bear going well north of $1 a litre and they took advantage,'' said Hugh Mackenzie, an economist researcher with the think tank.

The analysis gave a one day example of the overcharge, finding that on May 8 of this year Canadians paid an average of about 18 cents a litre more than if the same price structure in place before Katrina still applied. The differential ran from 13.6 cents in Montreal to 27.2 cents in Vancouver.

Other examples were Halifax, 19.4 cents; St. John's, 16.3 cents; Quebec, 19 cents; Ottawa, 14.1 cents, Toronto, 15.1 cents; Winnipeg, 20.9 cents; Regina, 21.8 cents, Edmonton, 18.2 cents; and Victoria, 25.4 cents.

The research group has established what it calls an online gas gouge meter that calculates for consumers whether they have been overcharged or undercharged at the pump based on the current price of crude oil and where they live.

But opposition MPs said the time had come for the government to intervene directly by giving the Competition Act more teeth.

NDP Leader Jack Layton said the government should call an inquiry into record oil company profits and high gasoline prices, which have hovered above $1 a litre for several weeks in most cities across Canada.

``Despite these so-called increases in costs, actually these big companies are simply profiteering,'' he said. ``If there is competition it's the most unusual competition I've ever witnessed, where everyone changes direction at exactly the same time.''

Hamilton NDP MP Chris Charlton plans to introduce a private members bill next week calling for an oil and gas price ombudsman's office to receive and investigate complaints, require a response from industry, and report findings to the industry minister.

Charlton says Canadians are right to be skeptical of the wild fluctuations in prices, and when prices for gasoline rise each weekend and fall mid-week.

The Liberal party, which did not intervene in the price of gas when it was the government, also called for action. Leader Stephane Dion said it was time to give more powers to the Competition Bureau to deal with gas prices even though previous attempts have failed, even under his party.

``The Competition Bureau must have more tools, and National Resources must have the possibility to make studies ... to make sure nothing inappropriate is happening,'' he said.

Bernier said it was ironic that the same parties calling on his government to bring down gas prices also support a bill to respect Kyoto that would have the effect of increasing gas prices to much higher levels.