Study recommends a national transportation infrastructure strategy to reduce consumer fuel costs by addressing invisible bottlenecks.

According to a new report from the C.D. Howe Institute, Canada could benefit from lower fuel costs and a more robust economy by increasing its pipeline infrastructure and implementing a national transportation strategy.

In 2019, the B.C. Utilities Commission found that gas prices in Vancouver were significantly higher than in Seattle and Edmonton, attributing the difference to collusion and price fixing. In response, the provincial government passed the Fuel Price Transparency Act to address these issues.

An assistant professor of economics at the University of Calgary’s School of Public Policy pointed out that the real issue was the lack of pipeline capacity, as regulated tolls in Canada do not account for demand and pipeline capacity adjustments.

After 2006, the Trans Mountain pipeline experienced periods of high demand exceeding its capacity, leading to increased transportation costs and price disparities between Edmonton and B.C. markets. The pipeline expansion completed in May 2024 has helped alleviate some of these issues.

Despite higher tariffs post-expansion, the costs are still lower than rail transportation expenses. However, full pipeline availability would provide more relief for consumers in B.C.

Insufficient pipeline capacity is estimated to cost the BC economy significant amounts annually, highlighting the need for improved infrastructure and a national transportation strategy.

Beyond Pipelines

Other infrastructure bottlenecks across Canada’s economy also hinder growth. Canada lacks a formal transportation strategy, as noted by a report from the European Court of Auditors.

Regulatory delays and escalating construction costs, such as the Trans Mountain pipeline expansion, pose challenges for attracting infrastructure investments. Recognizing the importance of transportation infrastructure investments is crucial for Canada’s economic growth.

Canada should prioritize developing a comprehensive national transportation strategy and address the need for improved infrastructure investments to support both domestic and international trade.