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High gas prices front and centre in Ontario election as NDP propose cap, regulation

By Allison Jones in Toronto

Sky-high gas prices have Ontario’s political parties debating what should be done about the cost to fill up – to cut? To cap? To regulate? To look well beyond the pumps themselves?

The NDP is promising they would cap and regulate prices, a proposal the other three major parties dismissed as ineffective. NDP Leader Andrea Horwath said Friday she would regulate retail and wholesale mark-up of gas prices, getting the Ontario Energy Board to set a weekly price that includes reasonable profits for gas companies.

“It is absolutely time that Ontarians get a break at the pumps,” she said at an announcement via Zoom as she recovers from COVID-19.

“This is a plan for larger and more permanent savings guaranteed to go to you, not to gimmicks. There’s no time limits. This is something that will make a permanent change in the price that you pay at the pumps.”

The Progressive Conservatives have passed legislation while in government to implement a 5.7-cent cut to the gas tax for six months starting July 1. The average gas price in the province is sitting around $2 per litre.

Horwath has pledged to cancel that cut, saying the $600 million in lost revenue from the “gimmick” is better spent on hospitals and schools. She also said there would be nothing stopping gas companies from charging 5.7 cents more, once it goes into effect.

The Tories point to an analysis from Trevor Tombe on a gas tax holiday in Alberta, showing that it did indeed lower prices for the consumer.

Liberal Leader Steven Del Duca has said he would maintain that gas tax cut. The Tories have suggested he can’t support the temporary gas tax cut while also supporting carbon pricing, which increases the cost of gasoline.

Del Duca said the current cost of living requires that gas prices be addressed right now, but that there are also many pledges in his platform meant to address the climate crisis.

“We’re in the midst of an affordability crisis that I don’t believe we’ve seen, perhaps in my lifetime,” he said.

Green Party Leader Mike Schreiner said the best way to address transportation costs is with systemic solutions, such as electrification. They are proposing rebates for electric vehicles, cutting transit fares in half and eliminating the need for long, daily trips to and from work.

“We need to ensure that we build communities where people are not forced into long, expensive soul-crushing commutes, where they’re not forced to drive until they qualify for a mortgage,” he said. 

“The Ontario Greens’ plan is to address the foundation, the systemic causes of the affordability crunch people are facing at the pumps right now, so that we can solve it for today, tomorrow and well into the future.”

Schreiner, like the other party leaders, said gas price regulation has not been proven effective.

The Ontario Energy Board commissioned a report that found in 2017 that regulation doesn’t necessarily benefit consumers and in some provinces, regulation has resulted in higher prices.

“In Newfoundland, there is evidence that retailers used the weekly setting of the regulated maximum as a price signal, often deviating from a lower market-derived price, to a higher statutory price in coordination with their regulation’s administrative cycle,” the report said. 

“It is likely that if regulated maximum prices did not exist in Newfoundland, pump prices would not have behaved in this manner. This has likely contributed to retail margins that are among the highest in the country.”

The NDP said the OEB report on regulation looked at full price, while their plan looks at wholesale and retail profits. The party says the retail and wholesale profit margins in Ontario have exceeded the price of crude oil on several occasions in recent years and regulation would actually tie gas prices to crude prices.

This report by The Canadian Press was first published May 20, 2022.

Feature image – Ontario Progressive Conservative Party Leader Doug Ford, left to right, Ontario New Democratic Party Leader Andrea Horwath, Ontario Liberal Party Leader Steven Del Duca and Green Party of Ontario Leader Mike Schreiner pose for a photo ahead of the Ontario party leaders’ debate, in Toronto, Monday, May 16, 2022. Ontario’s election campaign will run half virtually, half in-person today, as the leaders for the New Democratic and Green parties isolate with COVID-19. THE CANADIAN PRESS/Frank Gunn