Canadians Getting Gouged At The Pump
Sep 16, 2008
As if the recent escalation in gasoline prices wasn’t enough, Winnipeggers woke recently to see that pump prices had gone up 15 cents per litre literally overnight. Prices at gas bars reached a record $1.48 per litre, the highest in the country. Just when it looked like prices were beginning to stabilize, prices jumped across the nation.
Why gas prices go up – especially when the cost of crude oil remains relatively stagnant or even decreases significantly as it has of late – is the subject of constant debate. Some point to the increases as a response to the decision of the American oil industry to shut down most of its operations in the Gulf of Mexico in anticipation of hurricane Ike.
Expected to hit parts of Texas as a Category 3 hurricane, Ike’s impending arrival led to a 15 to 20 percent reduction in American production as a result of this. The Houston region is home to about 20 percent of US refining capacity and the site of a major fuel distribution channel.
So, as some economists say, as supply goes down, costs go up. Interestingly, however, prices in the US only increased by an average of one cent per gallon at the same time they spiked in Canada, according to various studies, including one by the American Automobile Association. So if reduced supply causes prices to rise, why did they barely rise at all in the US, while going up dramatically in Canada?
This is where other industry experts make their case. Some, including Hugh Mackenzie of the Canadian Centre for Policy Alternatives (CCPA) claim that these increases are the result of nothing more than industry greed. He even goes so far as to suggest that the oil industry has closed refineries in strategic locations across North America so as to maximize the impact of natural disasters on the price at the pumps.
Mackenzie has also calculated that for every one-cent rise in the price of gasoline, the Canadian oil industry in Canada reaps an extra $1 million every day in profit.
It seems that the industry does in fact charge what it believes the public is willing to bear. With crude oil prices dropping some 30 percent between July and September, how else could one explain the continued increase in the price of gasoline? The shutdown of production in the Gulf of Mexico only caused a marginal increase in the price of crude, yet gasoline prices in Winnipeg jumped by more than 10 percent.
So while it is somewhat likely that natural disasters do limit supply and therefore cause prices to rise at times, the corresponding increases at the pumps are completely out of line with the scale of these increases. It becomes virtually impossible to believe that this is attributable to anything other than price gouging.
To see what Mackenzie calculates Canadians should be paying at the pumps, the CCPA has developed an online gasoline price gouge meter. It can be found at www.gasgouge.ca.
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I'd like to add my name to the card objecting to Province for not doing enough to protect citizens being gouged at the gas pumps Thank, George Braun
George Braun - 2008-09-16 22:31
George, if you want to send a message to Minister Sellinger's office by email visit this page http://www.mgeu.mb.ca/151/241/1339 and click on one of the links. If you would like to request some cards to send in give the Resource Centre a call 1-866-982-6438 and they can mail some out to you.
Jeremy - 2008-09-17 12:01
I have a company truck to drive to work.....I would rather have a raise. Can you explain to me how increased mileage rates will benefit myself?
Anonymous - 2008-09-25 16:29