Labour Day weekend: for Canadians, this means back-to school preparations, a final celebration of summer, picnics and Canadian Football. And again this year, Labour Day will see large increases in prices at local gas stations. This week, the cost of regular unleaded gasoline hit 90 cents a litre with no end in sight.

The oil and gas industry has mounted a campaign for years to blame high gas prices on governments — provincial and federal. When I visit my local Petro Canada, I am greeted at the gas pump with a pie chart, showing that the largest share of gasoline costs goes to taxes (44 per cent), followed by the cost of petroleum (37 per cent) and refining and marketing (17 per cent). Only a meager 1-2 per cent goes to profit according to industry. The profit seems so modest that I feel like kicking in an extra couple of dollars to help them out. High gas prices are OPEC’s fault, or Venezuela’s, or the war in Iraq’s or Ottawa’s or Victoria’s say the oil companies. Don’t blame us, blame them.

However, the dramatic increases over the past few years are not the result of tax increases. In the summer of 1998, regular unleaded gasoline cost 53 cents per litre. In the summer of 2000, this had risen to 73 cents a litre at my local gas station. This week, it is more than 90 cents, a remarkable 73 per cent increase in five years. In that time, only the BC Liberals have increased gas taxes, a 2.5 cent a litre to help offset the government’s large tax cuts to the wealthy. So even if gas taxes are high, they are not responsible for more than a fraction of the almost 40 cent a litre increase in the last five years.

There is no question that crude oil prices are in part increasing as a result of world events. However, these prices — and substantial increases in what the industry call “refining and marketing” costs — also produce windfall prices for the oil industry. As one investment analyst wrote this week, the industry is “gushing profits” and can be expect to do so for quite some time.

Shell Canada reported this summer that its second quarter profit increased to $178 million, a 144 per cent increase over the same period in 2002. Imperial Oil’s second quarter profit rose 66 per cent to $514 million and Petro Canada’s jumped to $514 million or 88 per cent over the same period in 2002. These increases were attributed in large part to “increased margins on sales of petroleum.”

As gas prices have skyrocketed, so have oil industry profits. Consumers are being “hosed” at the gas pump again. There is little, if any price competition between oil companies in North America.

Yesterday, in California, Lieutenant Governor Cruz Bustamante, currently the leading candidate for Governor, proposed state regulation of gas prices under the Public Utilities Commission, the same commission that regulates prices for monopoly industries.

Gasoline prices are higher in California than any other state. Why? After years of corporate mergers, five companies — Chevron/Texaco, Phillips, Shell, BP and Exxon, monopolize the state’s market. According to the Utility Consumers Action Network “the real problem with the gasoline industry is that it is not competitive.”

The proposal to regulate gas prices is not a new socialist concept. Monopoly industries such as pipeline or telephone companies have faced such regulation for decades. Such regulation is no protection against high prices. But consumers know, for example when they pay increases in their natural gas bills to Terasen (Centra Gas), that their money is going to pay for a more expensive product and not to increase company profits.

Reducing gasoline prices through government regulation is therefore one option. However, high gasoline prices have one positive effect — by discouraging automobile use, they may help the environment. After all, air pollution, mostly caused by cars, is a significant threat to our health and quality of life.

Better than regulation to bring down prices therefore, would be increased profits tax on the oil industry. Proceeds could be returned directly to Canadians in the form of a tax reduction. The result would be a reduction in rapacious profit taking by the industry while maintaining the environmental benefits of higher gas prices.

The oil companies argue that they are a competitive industry that should be left alone. They are however failing to act competitively. Except for the occasional retail price war usually kicked off by local independent retailers, there is little evidence of competition on price between the companies. Petro Canada or Imperial Oil could compete for a higher market share by lowering prices. Instead, not surprisingly, they are reaping skyrocketing profits under the present model.

The oil industry continues to take us for a ride. The federal government needs to step in and return some of the excess oil company profits to Canadians.