How come the people in the province who extract and refine the oil pay more than those in Ontario?
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In Toronto on Tuesday, the highest gasoline price recorded by the watchdog GasBuddy was 186.9 cents per litre.
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In Calgary, the highest and most common price was 191.9 cents per liter.
How come the people in the province who extract and refine the oil pay more than those in Ontario, who produce less than three percent of their own needs?
The answers are complex to the point of mystification, but they boil down to a simple reality at the pumps: Calgary motorists are getting screwed.
Fuels analyst Dan McTeague says Western retailers are exploiting from Manitoba to BC Profit margins are much lower in Ontario.
U of C economist Trevor Tombe says that “margins are absolutely higher than they were. That is a global phenomenon. The markets are volatile and I am hesitant to draw too many conclusions.
“But at this point, the data is pretty clear: The margins are higher here than they are in Ontario.”
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Ontario’s margin is about 10 percent. In Calgary, McTeague says, it will be 42 cents a liter on Wednesday for retailers still refusing to drop the 191.9 price.
One of the reasons for the growth in margins is the drop in wholesale prices. Many Calgary stations stubbornly keep the price even though supplies are cheaper.
It couldn’t be clearer that governments are losing control of inflation, even as they pay to keep it low.
Those Calgary prices are a perfect example.
The province is already waiving a 13-cent tax on a liter of gasoline.
If they weren’t doing that, obviously Calgarians would be paying even more than current pump prices.
But on Tuesday, according to Tombe, the price was only 5.3 cents a liter lower than it would be without the tax break.
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“Today’s high margins are significantly reducing the gas tax pass-through in the last week or two,” he says.
Where the hell do those 13 cents go? McTeague suggests that the lucky recipients are gas station retailers.
“Your pockets are being picked,” he says.
When the PCU announced the tax exemption on March 7, Finance Minister Travis Toews said: “We will be keeping an eye on the price behavior of retailers.”
While acknowledging that the government cannot force price restrictions, he said the UCP would “pressure” retailers to follow it.
There is no visible pressure. Instead, we have a race for the leadership of the PCU.
Toews, who is running, is no longer the finance minister. The government simply lets prices rise, even as the treasury forgoes more than $100 million in revenue every three months.
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Any candidate for leadership of the PCU will eventually have to deal with inflation.
Rajan Sawhney introduced a policy Tuesday, calling for provincial income tax re-indexation and five programs that affect low-income Albertans. He also asked for $75 affordability checks for each household, with an additional $25 for each child.
The PCU has used deindexation (freezing payments regardless of the level of inflation) to keep expenses low.
With massive royalty earnings from the very product hitting us at the pumps, there is no reasonable argument for continuing the freeze.
Prime Minister Jason Kenney is expected to announce government measures this week. It would be surprising, even ruthless, if the UCP continues to de-index payments to people with the greatest needs.
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This inflation is dangerous, both politically and socially. Governments may resort to desperate means if their survival is at stake.
When inflation hit 10 percent in 1975, Prime Minister Pierre Trudeau announced the Anti-Inflation Law, commonly called wage and price controls.
It was a federal bureaucratic intrusion like no other. An Anti-Inflation Board examined beef prices, employee wages, car prices, company profits, and much more. The companies were forced to lose more than 300 million dollars.
And Ottawa regulated gasoline prices. Our local retailers should think hard about that.
Don Braid’s column appears regularly in the Herald
Twitter: @DonBraid
