Policy watchdog group says oil companies gouge consumers

| 5/14/2007

A Canadian watchdog group is blasting oil companies and gasoline retailers for allegedly gouging consumers to the tune of millions of dollars.

Researcher and economist Hugh Mackenzie with the Canadian Centre for Policy Alternatives said gasoline prices in Canada are between 16 cents and 21 cents per liter higher than they should be.

With approximately 3.8 liters in a U.S. gallon, that’s an unexplained “gouging” of 60 cents to 80 cents per gallon, MacKenzie’s report suggests.

In the report, MacKenzie said price hikes in the wake of Hurricane Katrina were not justified north of the border, and that the shock tactics of the oil companies kept consumer complaints at bay.

The watchdog group came up with a formula for tracking costs, market conditions and industry explanations associated with price increases since 2005.

Using prices recorded on May 8, 2007, MacKenzie used the policy center’s formula to show that “normal” gas prices in Canada should range from 84 cents to about $1 per liter, not the $1.10 to $1.23 currently displayed at the pumps.

MacKenzie asserts that oil industry officials are quick to put a spin on rising prices as if they have little control.

“It is evident that these aren’t ‘explanations’ at all, that they are after-the-fact rationalizations for the price-gouging opportunities seized by the oil industry, or noise introduced into the discussion to distract attention from what is really going on,” MacKenzie wrote.

Federal opposition leaders to Prime Minister Stephen Harper’s Conservative Party administration are demanding the government take action based on the report.

Click here to read the report.