Regulation not the answer to Ontario's high gas prices, analyst says

Regulation is not the solution to Ontario's high gas prices, according to a petroleum analyst who says proposed legislation to regulate prices at the pumps would result in overall higher costs for consumers.

A bill that would give the Ontario Energy Board power to regulate the price and mark-up of petroleum products is set to be reviewed by the legislative committee.

Timmins New Democrat MPP Gilles Bisson, who tabled the bill, told CBC News the goal is to reduce the wide price gap between communities and prevent surges on weekends.

Dan McTeague, a senior analyst with GasBuddy.com, said there are a lot of factors behind the gaps and fluctuations in gas prices, including wholesale prices, transportation costs and regional markets.

No more deals

"The other factor is retail margins. Retailers have control of about 10 or 11 cents on a litre of gasoline, depending on competition in their own regions," McTeague explained.

"Many gas stations may be competing with big box stores or other circumstances that force them to try and shave those margins down."

Retailers currently have the ability to give consumers good deals, McTeague said, but that would change with regulation.

"You're not going to see any communities drop, or any gas stations be able to drop prices five or six cents a litre," he said. "You'd be paying one firm, unique and high price."

'More harm than good'

McTeague said the root of the problem is a lack of competition due to the declining number of refineries in Canada, which has led to "systemic higher prices."

"But that's not something that you're going to be able to change, especially when our environmental policies provincial and federal have led to an even greater number of refineries shutting down," he said.

Rather than turning to government more regulation, McTeague said there needs to be a better understanding of how the market works.

"It would be really great if those who are espousing the simplistic idea that regulation is a panacea for all could take the time to learn about the industry rather than trying to go out and fix a problem that frankly would have the effect, perhaps unintended, of doing more harm than good."