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[en] The recent increases in the price of automotive fuels, especially gasoline is discussed. The Canadian Automobile Association (CAA) makes several recommendation as to how the government might intervene to bring prices back down to a realistic level. First and foremost, the CAA recommends an outright gasoline tax cut, noting that tax on gasoline has increased from 1.5 cent to 10 cents a litre since 1885. The CAA also suggests that a minimum of 5 cents reduction in price would result if the GST were applied only on an ex-tax basis instead of being tacked on to the total pump price after federal and provincial taxes have been added, which in effect amounts to a tax on tax. The provinces could also help by cutting back on their gasoline taxes which range from a low of 9 cents in Alberta to a high of 16.5 cents in Newfoundland. It is noted that the Ottawa-based Canadian Petroleum Products Institute, which represents the major oil companies, does not support the CAA suggestions and dismisses concerns regarding the near-monopoly in the market held by a few major oil companies by saying that while there are admittedly fewer small independents in the market, competition from new larger entrants has actually increased. The Institute spokesman attributes the recent round of price increases as merely the results of world market forces (despite the fact that Canada is a net exporter of oil). At the same time, the Independent Retail Gasoline Merchant Association wants the government to conduct a fundamental review of the Competition Act, to harmonize Canadian laws with those of the United States, our largest trading partner. The Association believes that the Competition Bureau has evolved into a a quasi-judicial body, and is mired in red tape. The Association also suggests that in the meantime, the government should invoke the Energy Supplies Emergency Act to stop Big Oil's 'deceitful price gouging'
[en] A comparison is presented of the economies of scale achieved by the gasoline retailing sector in Canada and the United States over the period 1980-1990. Gasoline demand increased steadily in the USA and by 1990 was 10% higher than in 1980, while in Canada the fluctuating demand has led to a 12% decline for the same period. Number of automobiles increased 23% in Canada compared to 19% in the USA, while number of retail outlets fell by 5,000 in Canada and 47,000 in the USA. The average distance travelled by automobile increased 11% and 7%, respectively for Canada and the USA, however Canadians drove 7% further than Americans. In 1990, automobiles used ca 200 litres less fuel per year in Canada than the USA. Average sales per outlet increased by 56% in the USA and 10% in Canada. While most of the price difference between American and Canadian gasoline is attributable to taxes, the larger size of American refineries, transportation costs, product slate and product demand affects prices. 6 figs
[en] An inquiry was initiated by the President of the Quebec Energy Board (Regie de l'energie) on October 7, 1999 to review the reasons for the wide fluctuations in the retail sale prices of gasoline and diesel fuel in the regions of Abitibi-Temiscamingue, Saguenay/Lac-Saint-Jean and the Upper Mauricie, although the Board has no jurisdiction over the prices charged for petroleum products or anti-competitive practices. Consequently, the inquiry confined itself to an analysis of the information pertaining to the structure and forces driving the petroleum products market, and an examination of price mechanisms and consumer reactions in these regions. The inquiry reviewed the relevant legislation and regulation, the social, economic and energy situations in the affected regions, and the structure and functioning of the market for gasoline and diesel fuel. The inquiry came to the conclusion that the price fluctuations during the period under review reflected the wholesale prices recorded at Montreal and Quebec, which are determined by national and international market forces over which Quebec has no significant control. Furthermore, the inquiry concluded that although market forces are present and functioning in the regions, there are relatively few outlets affiliated with major oil companies, and a large number of independent retail outlets with relatively small volumes of annual sales. They essentially set their own prices at a level that reflect their cost of operation. Appendices contain the Inquiry's mandate, a list of those who testified before the Inquiry, a map showing the geographic profile of the regions surveyed and a list of figures and tables. 18 tabs., 31 figs
[en] The Italian Competition Authority opened a new procedure dealing with gasoline retail activities and with the alleged collusion between the main companies of this sector. The preliminary adversary arguments do not seem to be firm enough to pass through a possible appeal to the Italian administrative courts. This is why the Authority and the companies could agree and binding commitments in order to close the case in advance
[it]L'Autorita Garante della Concorrenza e del Mercato ha aperto una nuova istruttoria sul mercato della distribuzione dei carburanti in rete, ipotizzando l'esistenza di un accordo collusivo tra le principali compagnie del settore. L'impianto accusatorio preliminare sembra pero non essere a prova di Tar e Consiglio di Stato, ragion per cui l'Autorita e compagnie potrebbero accordarsi su di una serie di impegni per archiviare il caso
[en] On January 1, 2007, the Electric Reliability Council of Texas (ERCOT) market became the first restructured market in the US to completely remove caps on the prices which could be charged to residential energy consumers by the retailers associated with the traditional or incumbent utility service providers. Our analysis suggests that the expiration of the price-to-beat (PTB) price caps may have led to a reduction in the average prices charged by competitive retail electric providers (REPs). (author)
[en] Barriers to competitive supplier entry such as California's wholesale-price pass-through model can provide an almost insurmountable barrier to effective retail competition. The telecommunications, airline, and software industries provide lessons--positive and negative--on how creating competitive wholesale markets is insufficient to bring the benefits of competition to smaller consumers
[en] Power generation, transmission and distribution are the 3 main components of the electricity market. For many years, most jurisdictions chose to vertically integrate these segments into government or private monopolies. Price controls or rate of return regulations were commonly imposed by governments to prevent the abuse of monopoly power. However, inefficiencies with these arrangements led to poor investment decisions. As a result, many jurisdictions re-evaluated the structure of electricity markets. Restructuring was motivated by the desire to shift investment risk from consumers or taxpayers to producers and investors. The introduction of competitive electricity generation markets created a new sector in the industry. This sector was the retailing or selling of electricity to end-users by retail intermediaries. Although restructuring of the industry should offer more efficient pricing and better-informed consumption and investment decisions, there are many challenges in electricity reform. These challenges include pricing by incumbent generators, transmitters and distributors; discriminatory network access by monopoly transmitters and distributors; inelasticity of electricity supply and demand at peak times; lack of real-time price notification and response by consumers; stranded costs; and, political and consumer resistance to increases in retail prices. The time it takes to get a new power plant online is another issues that complicates new entry in the generation sector. The results of restructuring in Ontario, California, United Kingdom, Pennsylvania, New Jersey, Maryland, Alberta, and Australia were examined. These jurisdictions are trying to find a balance between competition and regulation. 91 refs., 2 figs
[en] William Hogan introduced financial transmission rights as a tool to hedge the locational risk inherent in locational marginal prices. FTRs are claimed to serve four main purposes: (1) provide a hedge for nodal price differences, (2) provide revenue sufficiency for contracts for differences, (3) distribute the merchandizing surplus an RTO accrues in market operations, and (4) provide a price signal for transmission and generation developers. This paper examines the hedging and redistributional properties of FTRs. It argues that FTR allocation has important distributional impacts and related implications for retail rates. This observation adds an additional explanation for rate increases in light of decreased production costs due to restructuring. This paper also shows that RTO practices have important implications for the hedging characteristics of FTRs. It further shows, via counterexample, that, even in theory, FTRs may not serve as a perfect hedge against congestion charges. The paper concludes with a series of recommendations for FTR allocation and the functions that FTRs should serve. (author)
[en] Highlights: • We use a normalised beta function within an asymmetric mixed data sampling model. • Retail petrol price falls are symmetrically passed onto motorists after 10–50 days. • Price increases are passed onto consumers after 30–60 days with higher magnitudes. • There is evidence of uncompetitive pricing tactics in the Australian petrol market. - Abstract: This article investigates whether uncompetitive pricing tactics are being employed in the retail petrol market in Australia through examining the effect of a change in daily oil prices on monthly petrol prices. To do so, we incorporate asymmetry into the coefficients of a normalised beta weighting function within an Asymmetric Mixed Data Sampling (AMIDAS) framework. This enables us to examine both the timing, and the lagged marginal effects, of a change in retail petrol prices in response to a change in the oil price. We find evidence of asymmetries in both the timing, and magnitude, of retail petrol prices to a change in the oil price. Specifically, we find that while price falls are slowly and symmetrically passed onto consumers, price increases are more delayed, but higher in intensity over time. Depending on the capital city, when retailers eventually do increase petrol prices, in response to an oil price rise with delay, the price rise is between 2.1 and 3.4 times more than when retailers reduce petrol prices in response to a fall in the price of oil. This finding is consistent with retailers delaying substantial petrol price rises in order to mask the existence of uncompetitive practices.
[en] On January 1, 2007, the Electric Reliability Council of Texas (ERCOT) market became the first restructured market in the US to completely remove caps on the prices which could be charged to residential energy consumers by the retailers associated with the traditional or incumbent utility service providers. Our analysis suggests that the expiration of the price-to-beat (PTB) price caps may have led to a reduction in the average prices charged by competitive retail electric providers (REPs).