Gas price games

By Admin Wednesday July 02 2014 in Editorial
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One might be hard pressed to make the connection between the current political crisis in Iraq and the increased cost for a long weekend trip to Algonquin Park or even a short drive to the lake, but gas retailers and the other players involved in gas pricing have decided the clash between Sunni and Shi’a groups thousands of kilometres away is good enough reason.

 

Who would have imagined the U.S. incursion into Iraq in 2003 premised on the George W. Bush administration’s erroneous claims of Iraq stockpiling weapons of mass destruction would, 10 years on, have repercussions for motorists in Canada, a country with no shortage of petroleum resources? However, money managers look at the current crisis there, born out of that fateful military action by Washington, and project a shortage here. As we know from simply economics, when a product is in short supply the price goes up. Except that there is no short supply.

 

This artificially imposed rise in the price of crude oil, against the backdrop of the declining value of the Canadian dollar, is the latest burden on motorists, not to mention truckers who bring food and other goods from all across the continent to the Greater Toronto Area. Which also means that even those who do not drive cars will be feeling the pain.

 

Gas prices are expected to increase to a new high this summer. Already the price across Canada has gone up from $1.36 per litre in the spring, recently hitting a two-year high of $1.44. Compare this year’s Canada Day price hovering above $1.40 per litre to Canada Day 2012 when it was $1.23.

 

This may make some environmentalists happy as they would argue that it is better for the environment to have fewer cars on the road. But until there is a comprehensive transition to alternative fuels, the sudden sharp increase in fuel price will have an immediate and dramatic impact especially for those whose livelihoods depend on having a tank of gas – cab drivers and self-employed landscapers who have to move their heavy equipment from job to job in pick-ups, for instance.

 

Energy cost increase is projected to cut into family budgets by some $2,000 annually yet, especially given the times, family incomes will not increase at the same rate.

 

Price instability only adds more pressure to daily life as people try to figure out where they are going to cut household spending to still be able to afford to get to work or other immediate concerns that require distance traveling.

 

The problem with the increase in fuel cost as well as the all too predictable fluctuations on the way to higher prices is that it plays havoc with everyday people’s ability to manage, while money managers and others in the fuel distribution industry play with numbers to improve their bottom line. What are merely numbers to them results in more expense for those who must rely on their vehicle.

 

The government takes a hands-off approach, ostensibly not wanting to interfere with the free-market culture that operates in the energy industry, while groups like the Canadian Association of Petroleum Producers ensure through their powerful lobbies that the government is in sync with their demands. Industry regulations, and aspects regarding pricing, do not reflect any meaningful input from ordinary Canadians whose wallets nonetheless bear the load.

 

What are the alternatives when here in the Greater Toronto Area, for example, the public transportation infrastructure has a long way to go to catch up to the relative convenience of individually owned vehicles?

 

A weekend trip from Toronto to Algonquin Park would be more convenient by car for a family. But it would cost upwards of $80 for gas there and back, bearing in mind too that gas prices predictably rise on long weekends.in the summer.

 

The oil industry pays less as a percentage in tax to the government, yet is allowed to influence the rules. Every time we fill up at the gas pump, we pay at least 31 cents from every dollar in taxes to the various levels of government, yet we get very little protection in terms of price controls from our elected officials. This is hardly a fair exchange.

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