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On Gas Prices, Let’s Serve People Over Politics

2008_09_15_Do_Nothing_On_Gas.jpg
Photo by functoruser.
The dramatic rise in gas prices has the prime minister wannabes speaking out against it. However, as much as they talk, like our mamas taught us, actions count for more than words. And we’re willing to gamble that not a single leader has had to pump his or her own gas in recent months.


Otherwise, why the inaction over the arguably number one thing on the minds of Torontonians—and Canadians—for the past year: gas prices, gas prices, gas prices. Watching as the price of gas goes up while the price of oil plummets is the cruelest joke, and citizens from across the GTA from Mississauga to Vaughan to Pickering are suffering prices of $1.38 per litre. (Forget the politico-babble trying to divide small towns and cities: across Ontario—from Chatham to Nepean—jaws dropped as the numbers outside petrol stations surged 9%. Anyone can see we’re all being equally gouged, city folk and country folk alike.)
What are the Canadian political parties planning to do? Don’t bother looking on their websites; there isn’t any information worth the pixels it’s shown on. On the Conservative website, click under “Key Issues.” Did you know that gas at $1.40 a litre is not one of them? Funny: listen to the conversation in offices, in restaurants, and in homes. It’s a key issue. Move to the Liberal website: anything on gas price concerns? Not anywhere easily found. (At least Dion is supporting a new refinery out east, which could reduce price volatility.) The Greens are too busy patting themselves on the back for getting in on the debate. Et le Bloc Québécois? Rien. Only the NDP mentions stopping gas price gouging, via an ombudsman to follow up on complaints—a step in the right direction, but not nearly specific or aggressive enough.
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Photo by photojunkie from the Torontoist Flickr Pool.
The only relief Canadians got was the cut in GST by 2%. Unfortunately, that’s only two to three cents per litre. The jump in gas prices overnight was up to 600% that amount. People might say that it’s better than nothing, except in this case it actually is nothing. On gas, the government charges tax on top of tax. According to the CAA, gas prices are made up of 30 to 40% taxes, including a federal government excise tax of 10 cents per litre. The government then applies the GST on top of this total gas price, which means the government gets an extra two to three cents per litre in tax-on-tax, which washes out the GST cut. Some tax relief. Why did Jim Prentice get his underwear in knots over incoming text message costs when, for over a year, Canadians have asked for more reasonable gas prices?
We’re not suggesting that the politicians are incapable of finding a solution, we just believe that these elections reek of cheap parlour games: the political parties spend hundreds of millions of dollars playing Musical Chairs with the music so loud they can’t hear what we’re saying. (Why else are the Conservatives holding off on revealing what they’d do, instead “hinting” that they had a plan? Why serve the people ahead of the politics, right?)
How about bumping up the number of refineries in Canada so we’re not sitting ducks every time hurricanes L, M, N, O, and P hit the Gulf of Mexico? How about stopping the tax-on-tax so that the government isn’t stealing pennies out of one pocket and placing them back into the other pretending it’s tax relief? How about not belittling the Canadian public with ads on bird poop when that money—every last cent—could have gone into plans to fund alternative energy sources to oil, like solar and wind, to create the desperately needed manufacturing jobs in Ontario?
Without any strategies from Ottawa, drivers can expect painful gas prices for the near future. Last week, energy expert Joanne Hruska predicted on BNN’s Market Call that oil prices may increase during the winter period. When asked if the public could expect a similar 9% drop in gas prices once the worries over Ike are over, Hruska replied: “Come on.” Gas prices never go down in the same way they go up, she noted. Come on, indeed.

Comments

  • Shyzer

    It sure isn’t the number one thing in my mind. As a cyclist and occasional transit user I find high gas prices to be a cause for endless entertainment and smug self-satisfaction.

  • lastplaceman

    Shyzer: while I can appreciate your sense of smug self-satisfaction, just remember it the next time you have to buy groceries, or pretty much anything else while you’re at it.

  • McKingford

    This is a very strange post from the Torontoist.
    The reason so many people are adversely affected by spikes in gas prices is that for far too long we’ve had too cheap gas. This has had the effect of delaying the development of alternative energies, promoting the climate changing consumption of hydrocarbons (so that far too many people are affected by gas price spikes), and – apropos this article – promoting the notion that politicians need to reflexively react to spikes in gas prices.
    In order to accomplish what should be our goal of weaning our population off oil, (and promoting urban infrastructure and transit), we *need* high gas prices.
    I would also say that the refinery shortage is a red herring. Oil companies, more than anyone, know how much (or, in this case, little) oil is left. We are *at* peak oil. The 85 million barrels of oil the world currently produces (and consumes) is the max (which isn’t to say that this peak may last a while). Given this fact, it simply is not in the financial interests of the oil companies to build more refineries.

  • friend68

    If gasoline is an internationally traded commodity, subject to speculation and cost-fluctuations determined by the market rather that pure facts, like the price of oil, wouldn’t reduce the taxes give some small relief without really changing the situation, and result in the revenue being made up somewhere else?
    I think the extra refineries might be a good idea, but I think a high price is probably the only real incentive for people to use less and be more efficient. Our gas prices are still much cheaper than European prices.
    Of course, it also doesn’t take a genius to see that there needs to be work in the area of competition department, if all the gas stations of different companies raise their prices the same amount at the same time.
    But, in a supply and demand system, if you want the price of gasoline to go down, stop buying it.

  • Gauldar

    We have an addiction to oil and what it provides us with, and while high prices may convince people to cut back, we will never stop. The gas companies know this, and appologists will make responces like “You pay alot more for a bottle of Fruitopia”, or “It’s all about supply and demand”. Neither of those are the case, it’s all about dependency and how far we are willing to cooperate with the needs of the oil companies.

  • Green Sulfur

    This post is simplistic and naive. There might well be false sense of “market” since at best the oil industry is an oligopoly but anything the government does short of nationalizing oil will just boost the profits of the oil companies. For example, say Harper cuts the taxes on gas by .10/L tomorrow. By that afternoon, gas prices will go up .10 because the oil companies know that we’ll (well not me, I don’t drive) pay for it.
    I also agree with McKingford that high gas prices aren’t a bad thing. The fact is, the real cost of gas (including all the externalities) is approximately 13-15 times greater than the cost of gas. So I say let it be, even if that means my consumption-based lifestyle takes a hit.

  • joelphillips

    Road construction and maintenance, traffic policing, use of valuable public space and health implications of pollution are all expensive externalities associated with vehicle traffic. Taxes on fuel are not a perfect way to pay for these, but they are a lot fairer than using general taxation.
    I’d be more impressed by a call for lower taxes on fuel if it was accompanied by an analysis of these external costs of driving and you could demonstrate that you’re not getting value for what you pay in taxes.

  • PickleToes

    Even I think the case for government intervention in the oil companies’ “reign of terror” is clear. They have no substantial competition, and they can charge whatever they want with seemingly no repercussions. So allowing them to continue to have this stranglehold on the typically robust Canadian economy would actually be anti-capitalist.

  • Jaime Woo

    The current discussion on this post illustrates how complex (and, dare I say, interesting) the pricing of gasoline can be. What hasn’t been mentioned yet is why the political parties have not addressed the matter. I don’t believe demanding our political leaders to be better is simplistic or naive. I prefer it to being compliant or apathetic.

  • Ben

    Low gas prices don’t necessarily serve the people. You can make some very good arguments in favour of raising the price of gas.

  • Kevin Bracken

    If we dismantle NAFTA we can have cheap gas. The Agreement requires Canada to send a large percentage of its oil to the United States, somewhere around 50% if I believe. Not saying that’s a good idea, but it is an idea.

  • Green Sulfur

    PickleToes, it’s hard not to laugh at you. Apparently your ideology is only important when it doesn’t take away from your own self-interest. You’re just like all the other greedy conservatives.

  • chenyip

    I say we annex the weakest oil producing country and then keep its volatile neighbours at bay by exporting our delicious Timbits.

  • PickleToes

    Green Sulfur: Just what is my ideology?

  • rek

    If we cut the taxes put on gas, what do we lose? Road maintenance? Libraries? The elementary school system? I have no idea how much the government collects at the pump, but simply cutting the tax doesn’t seem like a solution at all: Speaking broadly, we live in a society where corporations take over more and more of government services because the notion of making everyone (not just the poor and lower middle class) pay their share of taxes has a chilling effect. Do we really need to hasten that? And what do we do when gas prices, sans tax, continue to rise and reach their previous levels?

  • PickleToes

    rek: Good points. Obviously whatever solution is imposed has to affect the root cause of the problem. Namely, oil companies that lack any accountability. Governments may be greedy and power hungry but eventually they have to answer to the voters. So in that regard it becomes relatively easy to curtail their thirst for power and wealth. I wish I could say as much about these corporations.

  • Jaime Woo

    Here are some places I’d like to see my tax dollars go to:
    - Enforcing higher fuel efficiency in vehicles
    - Investing in alternative fuels
    - Investing in public transit

  • Vincent Clement

    Jaime Woo: I thought Canadians cared about the environment? If that is true, why do we need the government to enforce higher fuel efficiency in vehicles? Shouldn’t we, the people, be demanding that from the auto manufacturers? We don’t need more government regulation.
    Invest in alternative fuels like ethanol in the US? Where government subsidies and polices have helped to drive up the price of corn which has helped drive up the price of feed and food? No thank you.
    Sorry, I would rather see my tax dollars stay, well, in my pocket. I know how to best spend my money.

  • rek

    Taxes aren’t about who knows how to spend the money better, that’s an invention of conservatives who can’t bring themselves to say what they really mean.

  • joelphillips

    Vincent:

    Sorry, I would rather see my tax dollars stay, well, in my pocket. I know how to best spend my money.

    So, you’ll be fully in favour of privatising all road construction and maintenance, then, and instituting a privately organised system of road pricing and toll collection?

  • torontothegreat

    >It sure isn’t the number one thing in my mind. As a cyclist and occasional transit user I find high gas prices to be a cause for endless entertainment and smug self-satisfaction.
    I admit to falling into this thinking too.
    >If we cut the taxes put on gas, what do we lose? Road maintenance? Libraries? The elementary school system? I have no idea how much the government collects at the pump, but simply cutting the tax doesn’t seem like a solution at all: Speaking broadly, we live in a society where corporations take over more and more of government services because the notion of making everyone (not just the poor and lower middle class) pay their share of taxes has a chilling effect. Do we really need to hasten that? And what do we do when gas prices, sans tax, continue to rise and reach their previous levels?
    Well said!

  • Ben

    The most foolish thing about cutting the tax is that the prices will catch up with any gas cut within a year or so anyway.
    Incidentally, the tax doesn’t even cover the upkeep of roads. Cars do more damage to the roads than they pay to fix at the pump.

  • McKingford

    The most foolish thing about cutting the tax is that the prices will catch up with any gas cut within a year or so anyway.
    Make that immediately.
    Given how price inelastic gas is (meaning consumers are still likely to buy even at high prices), cutting the gas tax won’t lower the price of gas at all, it will simply increase profits for the gas company. Put it another way: if consumers today are prepared to pay $1.35/litre for gas, there’s no reason they won’t pay it tomorrow too, even if the tax is cut 3 cents/litre – meaning the gas companies will be able to maintain the price at $1.35/litre, but an extra 3 cents of that goes into their pocket.
    We had this discussion earlier this year, when Hillary Clinton proposed a “gas tax holiday”. She could not find one single economist to say that this was either sound policy or, more importantly, that it would actually lower prices; in fact, they all agreed that this would simply transfer revenue from the government to the oil companies.

  • mileagecheck

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    Hugh Love – Essential Environmental Products (International) Limited, Burnaby, BC, Canada

  • canuck1975

    > the real cost of gas (including all the externalities) is approximately 13-15 times greater than the cost of gas.
    That comment really makes no sense. The real cost of gas is low enough that the oil producers & refiners are the new Rockefellers and Carnegies. Someone’s profiting on the backs of the world, and it sure ain’t the consumers.
    rek: most of the taxes at the pumps are excise taxes. Here’s a list: http://www.ontariogasprices.com/can_tax_info.aspx
    I took it from a non-governmental site to ensure it’s unbiased.