No one to blame but ourselves for high gas
Pipelines, refineries, deflated loonie
How much did you pay for your last two-litre carton of Lactancia lactose-free milk? No clue, right? How about the dozen extra-large organic eggs? No problem, those are trivial, so no wonder you’ve forgotten.
OK, now tell me the price of gas the last time you filled up. Ah, I bet you know that.
In fact, not only do you probably know the exact price of a litre of high-test last night, but, if you’re a typical Canadian, you’ve committed to memory how much your local retailer was gouging you for fuel yesterday, the day before that and, most probably, the month before as well.
It seems everyone north of the 49th is similarly tormented. My dear old dad — may he finally find some peace — kept a running tab, his 89-year-old mind still a razor-sharp database of comparative pricing some 15 years after he surrendered his driver’s licence. My neighbours, sensible folk, scour local stations for cheap fossil fuels with the fervour of a coupon clipper at Walmart.
Indeed, any explanation of this Canadian obsession meets a quick rational roadblock. In most vehicles, a five-cent-a-litre increase at the pump works out to a total of about four bucks, and only then if the tank was completely empty. That will barely buy you a double espresso at Starbucks which, judging by the lineup I endured this morning, no one is giving up.
Some people postulate it’s because Big Oil is screwing us out of our hard-earned dollars, but Big Government has been doing that to us for eons and, as much as we complain about it, we do not pay nearly as much attention to the real cost of social programs as we do a litre of 89 octane.
I like Dan Ariely’s explanation best. The James B. Duke professor of psychology and behavioural economics writes in Psychology Today that he thinks it’s because of the way we buy gas.
“For the several minutes that I stand at the pump,” says the author of Predictably Irrational, he stares “at the growing total on the meter — there is nothing else to do. And I have time to remember how much it cost a year ago, two years ago and even six years ago.”
Indeed, says the co-producer of The Truth About Lies, “I suspect that if I stood next to the yogurt case in the supermarket for five minutes every week with nothing to do but stare at the price, I would also know how much it has gone up. I might even have become outraged when yogurt passed the $2 mark.”
Whatever the case, we all seem to be consumed by the cost of gasoline. Pump pricing was one of the main reasons that Ontario elected Doug Ford. In British Columbia, the price of gas — nearing a buck-sixty a litre — is front-page news. Even in the normally prosaic Prairies, an inordinate amount of ink is being devoted to outrageous pump prices.
That’s not surprising, says Dan McTeague, the senior gas price analyst at GasBuddy.com, because the average cost of a litre of fuel has spiked some 30 cents since this time last year. On the low end of that equation, Quebecers are paying some 27 cents more for a litre while, at the other end of the country, the price for a litre of refined dinosaur juice is up some 36 cents. No wonder we’re outraged.
What will surprise Canadians, says McTeague, is why the price of fuel has skyrocketed. What the former Liberal MP from Pickering-Scarborough East says is different this time around is that 2018’s spike is less about government kleptocracy and corporate greed, and more about the simple laws of supply and demand, as distorted by our inability to get our — OK, Alberta’s — oil to market.
Here’s how that works: As everyone knows, there are huge issues facing the building of another pipeline from the Alberta oilsands to, well, basically anywhere. Traditional transportation methods — again, pipelines — are maxed out, and alternative shipping methods are expensive, so our oil is being heavily discounted. According to McTeague, the markdown is about US$24 dollar a barrel — US$74 a barrel for WTI versus the 50 bucks Albertan producers are getting — a huge drag on the Canadian economy.
Indeed, as McTeague sees it, that inefficiency has been enough to see the Canadian dollar decoupled from the price of oil. Now that we’re no longer considered a serious “petro-nation,” our loonie hasn’t — as it does traditionally — strengthened with the latest rally in the price of crude.
That’s a problem, says McTeague, because the refined gasoline we buy — according to futures pricing set on New York’s NYMEX exchange — is priced in American greenbacks. In other words, we’re selling discounted oil but buying inflated gasoline.
This disconnect is so dramatic, says McTeague, that, of the 30-cent pump premium we’re paying compared with this time last year, 17 cents is the result of the weak dollar that is, at least partially, caused by our inability to get our crude to market. Factor in other cross-border details — because so many local refineries closed between 1985 and 1995, British Columbians now import 25 per cent of their refined gasoline — and you have a pricing problem largely of our own making.
The soaring cost of gasoline may be infuriating the majority of Canadians, but fans of electrified vehicles are rejoicing. That’s especially true of plug-in electrics. Tesla sales may be stagnating, but Prius Prime is soaring, the Volt is doing very well and Nissan sold 423 Leafs in March. Mitsubishi’s Outlander PHEV, meanwhile, is on fire, the company coming out of nowhere to sell 755 plug-ins in the first quarter of the year.
As to whether the high price of gas has curbed truck and large SUV sales as so many predicted, the jury is still out. Sales of large SUVs are up and, overall, the truck segment continues to grow, albeit at a reduced pace.
One has to ask, if a 30-cent-a-year spike in pump prices doesn’t slow down truck sales, what will?
OUR INABILITY TO GET OUR — OK, ALBERTA’S — OIL TO MARKET.