ty of Eos, Mate do rénege, Dm 1 oo Hawt Blk ‘tag Eaton Heat = ‘Toe aN APA 21 SFr ow A721 Mr. Matthew Boswell Interim Commissioner of Competition Competition Bureau Place du Portage | 50 Victoria Street, Room C-114 Gatineau QC K1A 0C9 Dear Mr, Boswell: The Government of Ontario is committed to lowering the cost of living for all Ontarians During the summer of 2018, we fufiled our commitment to lower the price of gasoline and diesel through the elimination of the cap-and-trade carbon tax. This action alone was expected to provide savings of 4.3 cents por tre for gasoline and 5.0 cents per Iire {or diesel for all Ontario consumers of transportation fuels. ‘The Ministry of Energy, Northern Development and Mines monitors transportation fuel prices at both the wholesale and retal level on an ongoing basis. Starting on September 7, 2018, Ontario's wholesalers began to remove the cap-and-trade carbon tax and my ministry has been able to identify a corresponding decrease in the ‘wholesale price of transportation fuels across the province. In particular, the price difference between Ontario's wholesale prices and North American benchmarks (e.g. New York Harbour, Edmonton) decreased in alignment with the removal of cap-and- trade carbon tax costs. This decrease has persisted since early September 2018. In.a competitive market, our expectation is that local competion should ensure lower wholesale costs are passed onto consumers through lower retail prices, rather than being retained by retailers (i., increasing their retail margin). In most retail fuel markets across Ontario, retall prices decreased to reflect the removal of cap-and-trade carbon tax costs from wholesale prices and my ministry did not ‘observe any significant change in retail margins. However, in certain markets such as ‘Thunder Bay, Kenora, Fort Frances and Dryden in northwestern Ontario, the savings passed along at the wholesale level do not appear to have been incorporated in retail prices and shared with consumers. Joont'dFor example, using Kent Group Ltc,'s data for gasoline prices, Thunder Bay’s average ‘monthly wholesale gasoline price decreased from 91.8 cents per lite in August 2018 to 84.5 cents per ire in October. The corresponding retail gasoline price decreased from ‘an average of 145.4 cents per lite in Augusto 142.5 cents per litre in October. The result was the average retail margin in Thunder Bay increased from 12.2 cents per lire in August to 16.5 cents per lire in October. A retail margin of 16.5 cents per lite in Thunder Bay is well above the retail margin in other major gasoline markets in northem Ontario (e.g, ranging in October 2018 from 6.2 cents per lire in North Bay to 14,0 cents per litre in Timmins) These anomalies in northwester Ontario retail fuel prices may be evidence of a lack of competitive behaviour. Given these observations, | request the Competition Bureau undertake a fll review of gasoline and diesel retall pricing practices in northwestern Ontario. ‘Thank you for your attention to this important matter. | look forward to working together to serve all Ontarians f sincerely) /) my A J Thatunoulabie Glo Rickiond Tinstor of Ere. Nore Deveopment and Mines Enclosure : Hon. Navdeep Bains, Minister of Innovation, Science and Economic Development, Government of Canada Jennifer Stewart, Canadian Independent Petroleum Marketers Association Peter Boag, Canadian Fuels Association Rich Kruger, Imperial Oi Michael Crothers, Shell Canada Steven Wiliams, Suncor Energy Robert J. Peabody, Husky Energy Stephen Wetmore, Canadian Tire Corporation Dusty MacDonald, Federated Co-operatives LimitedAppendix; Weekly Thunder Bay Gasoline Prices August - October 2018 ‘+ These prices and margins correspond to the specific date, They are not weekly averages. Date Retail Price Wholesale Price Retail Margin arizo18 145.4 924 115 anaroie 145.3 o19 120 9121/2018, 1453 907 132 28/2018 145.4 92.0 i18 9142018 145.3, 22.4 4 sr4/2018. 145.3, 912 26 srarzo18 145.2 208 140 9252018 1449 2.3 12 ‘orzr018 143.9 921 05 101972018 1434 90.1 124 ‘0/16/2018 143.3 833 188 or28/2018 1415 B18 187 10/30/2018 tat 80.1 200 ‘Source: Kent Group Ltd