CBC "Indepth" Provides the Goods on Gas Prices

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Lydia Miljan

CBC "Indepth" Provides the Goods on Gas Prices

A funny thing happened as I surfed the CBC web site this month. I found a story on CBC's "Indepth" pages that provided some factual information, described the influence of government and the market, and even called for greater competition! While at first blush the story seemed to provide a reasoned discussion of current gas prices, it was unfortunately marred by faulty research on the part of CBC's "Marketplace."

The story in question was on the increase in gas prices across the country. Entitled "Gas Pains," CBC Online reporter Vince Rice shows what makes up the price of gas. As he indicates, one-third of the cost of gasoline is the crude oil price which, because it has been rising, explains why gas prices have been surging in recent weeks. The article also points out that "taxes account for nearly half the price" and that the "refiners' profit margin has dropped."

The "Gas Pains" article even includes the headline: "Competition Bureau concludes there is no conspiracy." While Rice slips into a defense of the federal government, noting that the "federal excise tax of 15 cents a litre has not been altered in several years," he quickly goes on in his article to note that the refiner's profit margin has actually dropped. More important, while the impetus for the article is the rising cost of gas, there is an underlying theme that competition is the most efficient means for consumers to see the best price. As Rice notes, "Gasoline is tailor-made for comparison shopping: how many products can you evaluate just by driving down the street? The price, after all, is plastered in huge numbers at every station."

The article also indicates that while Canadians feel like they pay a lot for gasoline, prices in this country are lower than in much of Europe, including Britain and France. However, a study by CBC's "Marketplace" (there is a link to the transcript on the "Indepth" web site), which Rice uses in his analysis, concludes that "even when taxes are excluded from the price, the US price was lower in seven out of ten cities." That "Marketplace" story argued that the reason Canadian gasoline prices are higher than in the States is because of less competition in Canada than in the United States. The argument was that with greater competition at the refinery level, costs to retailers are lower.

Unfortunately, these comments are misguided. The "Marketplace" story in which the cross-border comparison was done made a faulty comparison between a one-day price sample in the US with an average monthly price in Canada. Research on gas pricing has consistently shown that excluding taxes, the average American price compared with the average Canadian price is very close and, at times, Canadian prices are lower than American ones. While Imperial Oil pointed out this methodological error in a rebuttal to CBC, the CBC nonetheless continues to promote the "Marketplace" story on its current web site.

That said, in neither of these stories were government regulations or influence touted as possible solutions to high gas prices. Governments' only acknowledged role was to lower taxation levels: "Governments haven't shown any willingness to give a break on their share of the pump price." Clearly, in the area of gasoline prices, the public broadcaster has seen the merits of a market economy.

Unfortunately, to assume that this online story is representative of stories that appear on other CBC services is somewhat inaccurate. A quick look at some of the stories on CBC's "National" in February and March showed that the television service provides little analysis and plenty of rhetoric about price-gouging oil companies. For example, on March 7, Kelly Crowe showed a series of person-on-the-street interviews. In them, one person said, "I'm ... very disgusted at the price of fuel now." Another individual followed, saying, "There's no justification for it aside from gouging." During the first few months of the year, there was no shortage of people willing to complain about the price of gas on CBC. On February 23, another interviewee said, "The oil companies are just fleecing the consumers!"

We all know that bad news sells better than good news. The pleasant surprise is that the CBC got it partly right, and offered analysis before knee-jerk reactions. Too bad the Online story didn't get the same play as the stories of woe and anger presented on the "National," and that CBC didn't correct its faulty data and set the record straight on Canadian/US gas pricing.

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Last Modified: Wednesday June 9, 1999.