Price Gouging?

The price of gas at stations in Ottawa reached a new high over the weekend, 1.99.9 cents a litre. No-one is (so far) willing to cross over that two dollar mark. Experts though suggest it is coming in acouple of weeks.

A year ago the price was $1.26 a litre. Two years ago it was 82 cents a litre. Can you name anything else where the price has more than doubled in the past two years? Even housing prices haven’t risen quite that fast.

Recent price hikes are being blamed on the war in Ukraine. And COVID-19. On production cutbacks. On increased federal taxes. And, for all I know, on there being too many days in the month that end in the letter ‘y.’

There is a reason given for each individual price hike, but when you add them all up you have to wonder. Is extracting, processing and getting the gasoline to dealers costing energy companies more than twice what it did two years ago? Somehow I suspect there are record profits to go along with the record price hikes.

In a capitalist system, business owners are entitled to charge what the market can bear. If people don’t want to pay the price, they can shop elsewhere.

But what happens when the goods are essential? And it appears the capitalists are in league to artificially inflate prices? Should the government step in? Or will the people take matters into their own hands?

In 18th century France the people rioted becasue they could no longer afford bread. In 21st century Canada, you wonder if it will be gasoline that is the final straw.

Canada’s competition Bureau has investigated retail gas pricing in the past. They asssure us that there is no collusion, that prices rise and fall naturally. I have yet to meet anyone outside of those working at the Competition Bureau who believes that.

Gas prices at Ottawa pumps fluctuate throughout the day. The usual trend is that the prices start high in the morning and decline gradually until about 11 p.m., when prices go up to the morning level or higher, and the cycle starts over. I would have to be desperate to buy gasoline before 9 p.m.

This price fluctuation happens at every station and with every company. Officially there is no collusion, but looking at how quickly prices rise or fall across the city, you have to wonder.

You would think a station that priced gasoline a penny or two lower than its competitor across the street would make up the difference in increased volume. Isn’t that how capitalism is supposed to work? Lower prices give you an edge.

Instead, if station A raises its price, station B will do so immmediately. So much for competition.

I know in some countries the price of gasoline at the pumps is regulated by the government. I’m not sure that would work here. Given the efficiency of the federal government, any attempt to intervene would probably see higher prices not lower ones.

The suggestion that we use less oil and gas is frequently made. It’s a good one, but doesn’t take into account the realities of Canadian climate and distances. Our national passenger rail system is inadequate. There is no national bus system. To get from one place to another, most people are going to need to drive. Which means buying gas at whatever the inflated price is.

It isn’t just the pump price of gas that has risen. So too has the cost of heating oil and natural gas. Given Canadian winters, heating our homes is not an option. Increasingly there are news stories about people who are having to make hard choices, heat or food.

So what is the solution? Any ideas I come up with require major social change. Is that what is required? Do you have any ideas?

2 comments

  1. Thanks. I had seen similar breakdowns before, but not quite as comprehensive.

    The devil is in the details of course. Fuel companies raise prices when
    the first shot is fired, lower them long after the crisis has passed, giving themselves a nice windfall.

    I was already paying the equivalent of more than $2 a litre in Germany before the pandemic, so I have seen high prices before. And, with current technology, Canadians will still generate more greenhouse gases per capita than in many other countries.

    Or freeze to death. Which would solve the environmental issue.

  2. This is an excellent explanation of how gasoline prices are determined: https://www.canadianfuels.ca/our-industry/gasoline-prices/
    Want cheaper fuel? Then governments could reduce taxes – that is what Alberta did.
    Maybe a major social change is accepting that Canada’s 1.5% of GHG is as good as it is going to get if we are still going to heat our homes, grow food, etc in one of the coldest countries in the world.

    Trudeau wants Canada to be seen as a big player on the world stage, but in so many ways we are of limited to no consequence. Affecting world wide climate change is probably an area where we make little to no difference.

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