Drivers in B.C. will finally see some relief from their ongoing pain at the pump.
Premier John Horgan was joined by Public Safety Minister and Solicitor General Mike Farnworth Friday (March 25) morning to announce that drivers will receive a one-time rebate from ICBC of up to $110 for individuals and $165 for commercial drivers.
“Those prices at the pump are a direct result of Vladimir Putin’s invasion of Ukraine,” Horgan said. “But British Columbians still need to move around. We have a robust public transportation network in our urban centres, but large parts of British Columbia still rely on single-occupancy vehicles to get around.”
With prices nearing $2 per litre in many B.C. communities, Horgan was asked how far $110 will actually go for British Columbians.
“I think it’s a significant contribution at a very difficult time for drivers as they look at the price of the pump to know there’s relief on the way.”
Horgan cited the “robust financial health” of ICBC for making the rebates possible. The insurance corporation boasted $1.9 billion in net revenues in the past fiscal year. The government says the remaining windfall will be kept in capital reserves to ensure insurance rates “remain affordable” for the long term.
This will be the third ICBC rebate sent to British Columbians since 2021 and will be distributed in the same manner as the previous rebates.
Drivers of electric vehicles are eligible for the rebate as they pay insurance premiums that have contributed to ICBC’s financial position.
Rebates will start rolling out in May. The total cost to government is estimated to be $395 million
The province will be monitoring inflationary pressures driven by the Russian invasion of Ukraine, Horgan said, adding that there are more tools at the government’s disposal to address inflation.
“We have the capacity to make other announcements in the future. We’re monitoring inflationary pressures not just at the pump but across the economy and we’re always ready to step in if the need arises.”
Why is gas so expensive in B.C.?
Gas prices in B.C. are influenced by multiple factors at the provincial, national and global levels.
A good chunk of the price is made up of taxes.
This includes roughly 17 cents in provincially-set taxes, a 10-cent federal excise tax, GST, and a 17-cent TransLink tax only in Metro Vancouver. B.C.’s carbon tax will go up on April 1, adding another cent per litre of fuel.
That adds up to roughly 50 to 60 cents and doesn’t change as gas prices increase or decrease.
A much more influential measure is the ‘rack price’, or the price that retailers pay to oil companies Rack prices are posted online every day at 6 p.m. Rack prices are determined by the global price of crude, overhead costs, transporting refined oil and the refineries’ profit.
The Russian invasion of Ukraine sent global crude prices soaring and resulted in some drivers paying upwards of $2.20 per litre of gas in Metro Vancouver, despite the fact that Russian oil makes up a small fraction of Canadian energy imports.
B.C. gas prices have since dipped below the two-dollar mark, but they are creeping up again.
Distributors also pay a scarcity premium, which is higher in B.C. because of the high cost of transporting fuel to the west coast. B.C. receives a bulk of its fuel supply from the Parkland refinery in Burnaby, as well as from the United States.
An inquiry by the B.C. Utilities Commission in 2019 found that, on average, drivers in B.C. pay an “unexplained difference” of 13 cents more per litre than other provinces. Gas retailers are now required to report data to the government explaining the rationale behind fluctuations in prices to prevent gouging.
However, B.C.’s gas prices remain among the highest in North America.
– With files from Ashley Wadhwani