Tag Archives: fuel

Tax Cuts Won’t Address the “C” Word

By Jason Menard

Rampant calls for a reduction in federal taxes on gas may make for good sound bites, but it doesn’t appear that any of our political parties have the teeth to deal with the real problem.

As Finance Minister Ralph Goodale states, any tax reduction at the pumps would be brief at best. Any gains would be lost within hours because the actual issue would continue to go on unchecked – the relatively unfettered ability of the oil companies to set their own prices.

No one wants to bring up the dreaded “C” word when it comes to the inner machinations of Big Oil, but it’s hard for the average taxpayer, who finds themselves paying more and more at the pump, not to believe that there is some form of collusion and price-fixing taking place at a higher level.

If, as the powers-that-be state, there is no collusion in the Canadian gas market, then we need to see transparency in the process for how fuel prices are set. We need to know what market forces go into the rapid fluctuations at the pump, because what we see on our street corners doesn’t necessarily reflect what happens in the market.

What frustrates consumers is that they feel like they’re being held hostage to speculation. Instead of dealing with the realities of the market, we’re driving to work each morning to see a price based on fear, anticipation, and opportunism. We’re paying today’s market price for previously purchased gas that’s already in the tanks. The average consumer is fed up of paying $65 a barrel premiums for fuel made from crude that was purchased at $55.

Generally, one would think that if you purchased a product at one cost, you’d retail it for a little higher price. Then, once your supply ran out and you were forced to purchase more, your new price would reflect what your actual costs were. Instead, the purchase price seems to have no bearing on the actual price at the pumps. For all we know, the gas in the tanks could have been purchased at $40 a barrel, but the second that there’s a hint of a hurricane, we see some opportunists push the $2 a litre threshold, without any real rationale for doing so, other than speculation.

Conversely, the laws of a free-market economy don’t appear to be holding any sway over the gas industry. As a business-owner, one would think that a gas company would entertain the idea of dropping prices or offering premiums to entice people to purchase gas from their institution. Essentially, in any other sector, one would find certain providers willing to swallow some profits in order to gain market share. Considering the howls of anger and the sense of powerlessness that the average consumer has shared, think of the goodwill that a gas company would earn by reducing the price of their product to meet the needs of the community.

If that precipitates a price war, then so be it! That’s what the market’s supposed to be about: freedom to choose, freedom to set your own price, and freedom to compete with others in your industry. Yet, we find the opposite taking place. Instead of companies competing with each other, we find them magically reaching the same conclusion when it comes to setting the price of their product. And it appears the higher the better.

Generally, if it looks like a colluding duck and it walks like a colluding duck, then the conclusions are evident. If that’s not the case, then the government has an obligation to prove that to its populace.

But let’s be honest. We know that no party is going to risk upsetting that giant elephant in the corner known as Big Oil. There is little political wherewithal to confront this powerful lobby group head-on and address the problems at their source.

So instead of curing the disease, we’re railing against the symptoms. Instead of truly dealing with an issue of interest to Canadians, we’re presented with catchy sound bites advocating ineffective tax cuts. It’s political opportunism at its worst at a time when we need true political leadership.

Calls for tax cuts and sniping across the House of Commons only prove to the Canadian public that our elected representatives are only looking out for their own interests and those of their party. By not dealing with the actual problem, they’re showing that the game of politics trumps the realities of life and the needs of their electorate.

Demanding accountability and transparency from Big Oil is not the easy fight, or the safest one – but it’s the battle that we want fought. And the party that takes up the call should find that they’ll be fuelled by voters’ gratitude in the next election.

2005 © Menard Communications – Jason Menard All Rights Reserved

Gas Pains

By Jason Menard

A few weeks ago, when I was in Montreal, the prices had risen to $1.04 per litre and I was only comforted with the thought that the cost per litre had to be less in Ontario. I knew that I would feel good about paying whatever the rates were back in London, because they couldn’t be worse than what I was paying in La Belle Province.

I’m not proud of my petroleum-fueled Schadenfreude, but it’s a fact of life that we’re willing to pay whatever price the gas companies set for us, as long as someone else is worse off! It’s all a matter of perspective. And, as I stated, paying in the low-90s is much more palatable once we’ve already broken the $1.00 ceiling.

Oh, what a difference three weeks make. We are now them. And the ridiculously high gas prices are starting to have an impact on the economy around us.

As predicted, people are now flocking to gas stations that are selling at prices that only a month ago seemed outrageous. The people who are dancing in the streets when gas falls under that buck a litre threshold are the very same who were bitching vociferously when the price of gas rose to the mid-80s.

But, more tellingly, the ancillary effect of these higher gas prices is that people are choosing to restrict their activities – to the detriment of industries that rely on the summer season and that increased revenue for their livelihood.

Several times now I have spoken to people who have decided that enough is finally enough, and their cars are going to be used only for the bare necessities – driving to work, getting groceries, and small errands. The idea of getting behind the wheel and driving out of town on a day trip just doesn’t appeal to some any longer simply because it’s hard to rationalize the financial expenditures that any sort of trip would demand.

In Canada, the summer tourist season is painfully short already. Stores, restaurants, and areas that rely upon out-of-town traffic will soon start feeling the pinch caused by cautious motorists. Add to that the fact that many people are restricting the number of little jaunts they take throughout the city, thus reducing the number of opportunities they have to engage in impulse buying – and it’s plain to see that the rising costs of gas are having an impact on and off the roads.

“Essence à Juste Prix,” a Quebec-based organization (and it’s no surprise that’s it started there, considering the premium Quebec drivers are forced to pay for their petrol), is calling for the federal government to look into the escalating costs of fuelling up. At the same time, federal transport minister Jean Lapierre has stated that the feds have no intention of dropping the taxes Canadians pay at the pump. In the interim our gas companies raise and lower their prices in unison, somehow avoiding the spectre of collusion, yet appearing by their actions to collude.

So where does that leave us? Boycotting doesn’t work because, literally speaking, the gas companies have us over a barrel. While some of the major metropolitan areas in Canada, specifically Toronto and Montreal, have efficient, timely public transportation, others of us in the country don’t have the luxury to leave our wheels at home and take advantage of alternatives.

When I lived in Montreal, I was able to cross the island in 15 minutes by commuter train and metro to get to work, which saved on a 45-minute to an hour-long drive had I tried to traverse the city. Living in London, a 10-minute drive to work would take over an hour by public transportation – and that’s assuming I don’t miss on of the oh-so-infrequent busses that run all throughout the city.

Driving is my only option. And it’s the only option of many Canadians who are forced to travel any distance to work. We can restrict, conserve, and search for alternatives all we want, but we need to find a solution.

If the federal will is not there to reduce gas taxes or place caps on prices at the pumps, then they have to divert money into public transportation. People will make the switch if the alternative is palatable. I would sacrifice an extra half-hour out of my commute if I knew that the option was there for me. But I live in a fairly sizeable urban environment. Others aren’t so lucky (or unlucky, depending on your point of view).

The answers aren’t so cut and dried – but unless some action is taken, and soon, fuelling our cars won’t be our biggest problem, fuelling our economy will.

2005 © Menard Communications – Jason Menard All Rights Reserved

Tanks for the Memories

By Jason Menard

While filling up my tank in Montreal, I came to the realization that gas companies have us, both literally and figuratively, over a barrel.

I realized how bad the situation has gotten during a recent fill-up. Oh, how naïve I was when, leaving Ontario just last week, I grumbled about filling up with prices in the mid-80s. Little did I know what was awaiting me in la belle province.

Like a mountain climber that sets up a camp to acclimatize to the higher elevations, my family made a stop in the Ottawa-Gatineau region before continuing on our merry way. While the prices were in the low-90s, they served as a buffer for what I was to experience hitting Montreal.

104.9.

Unfortunately, that’s not the frequency of the radio station I was listening to. That was the price of gas staring at me from every Petro-Canada, Ultramar, and Esso on and off the island. I mean, I was ready to get out and push the car the rest of the way when I saw that. I didn’t even know those signs could hold three numbers before the period, but apparently they do.

But it wasn’t the price itself that discouraged me. It was how I reacted to it. The fact that when, mid-week, well past midnight, I found an out-of-the-way station that was selling gas for 94.9, I essentially broke out into a little petroleum-fuelled happy dance and — for a moment — I felt like I had found a portal to an on-ramp to Nirvana. I was actually able to look at a mid-90s price and say to myself, “Hey, that’s pretty cheap!”

I hit rock bottom when, the very next day, I took pleasure in watching others filling up at 104.9. I was engaging in a sort of sweet crude schadenfreude. It was at that time I realized how far gone we are. And that no matter how high the gas prices go, we’ll always find a way to happily pay the petroleum premium, as long as someone else, somewhere is paying more.

I’ve heard the arguments about how lucky we are in North America to essentially pay half of what our compatriots in Europe shell out for gas. But to me – and the majority of other vehicle owners in North America, that luxury is taken for granted. We’re used to paying well under a buck for a litre of gas and, judging by the grumbling at the pump, we’re not willing to give up that right.

However, the human mind has a great way to rationalize each and every purchase. We’ve seen our gas prices rise steadily each and every day. We’ve gone from grumbling about paying in the 70s to grumbling about paying in the 80s. Ontarians have grumbled about the rising costs of fuelling up, but happily do so with the idea that “at least we’re not paying Quebec or East Coast prices!”

But our costs are rising. And I think the gas companies have figured it out! Sure, they may send the prices skyrocketing by five or more cents one day, and we’ll all be up in a lather about it. But as prices ease up a bit – not back to their original threshold, but down a few pennies here and there – we grow accustomed to the inflated price and justify the cost by saying, “well, it’s cheaper than it was last week”

Yet today’s sticker shock-inducing price is tomorrow’s wistful memory. Fuelling up in the 60s and 70s used to be a travesty – now those prices are nothing more than fond sepia-tinged remembrances.

As drivers we all get into a huff about the rising cost of gas. We grouse and grumble about gas taxes, rising costs, and make off-hand comments about how the government needs to step in and do something about it. But we never really get mad enough to prompt any sort of action. At the same time as we fret and fume about the rising cost of gas, we’re digging in deeper into our pockets to find the cash to pay for our on-the-go lifestyle.

No matter how much we may try to conserve, drive smaller cars, or find alternative sources of transportation, we seem to have come to the same conclusion as a society: there’s really nothing we can do about the price of gas, so it’s time to put up and shut up.

So maybe I shouldn’t look upon the times that I fill up in Quebec as an out-of-the-ordinary occurrence. Perhaps I shouldn’t be shaking my head in disbelief, but rather nod my head in sage appreciation for the look into the future that I’ve been granted. After all, day-by-day, month-by-month, and price jump by price jump, we’re probably all going to be seeing four digits on our fuel pumps in the not-too-distance future.

After all, we may be over the same barrel, but as long as someone else is in a more uncomfortable position, we’ll be OK with our lot in life.

2005 © Menard Communications – Jason Menard All Rights Reserved