Juno News - July 28, 2024


Why is gas so expensive in Canada?


Episode Stats


Length

13 minutes

Words per minute

199.38353

Word count

2,609

Sentence count

10

Harmful content

Misogyny

1

sentences flagged

Hate speech

2

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, we talk with Dan McKagg, the President of Canadians for Affordable Energy and former Liberal MP and former MP on the Liberal committee on gasoline pricing. We discuss the recent report from the Competition Bureau suggesting that there may be anti-competitive conduct guiding gas prices across the country.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
00:00:00.000 let's talk about one thing we can find a lot more unanimity on among this audience i suspect which
00:00:13.800 is the uh devastating impacts of the carbon tax one of many not the only thing driving up the
00:00:19.660 cost of living but it is in fact doing it now that being said there is an interesting piece
00:00:25.740 that i wanted to get to on gas prices generally which is that the competition bureau is suspecting
00:00:32.160 there may be a little bit of anti-competitive conduct that is to use the watchdog's word
00:00:39.460 guiding gas prices the competition bureau is looking at a company called calibrate canada
00:00:45.780 which they suspect is guiding gas prices at 100 or 1700 fuel stations across the country
00:00:52.860 if you want to understand fuel prices there's only one guy in canada that knows everything about
00:00:59.480 them and that is our good friend dan mctagg who is the president of canadians for affordable energy
00:01:04.340 and also a former liberal member of parliament back when that meant something very different from what
00:01:09.600 it does today dan it's good to talk to you thanks for coming on today good to be here andrew and thank
00:01:15.440 you for the invitation i didn't realize gasoline was uh such a big deal these days it certainly
00:01:20.460 wasn't with the competition bureau 40 years ago 30 years ago when it was after this file
00:01:24.080 but glad to see that they're on it nevertheless yeah it was it's interesting because i think
00:01:28.860 anecdotally everyone would assume there was some sort of a passive collusion going on because you
00:01:34.600 know everyone has seen the intersections with three gas stations where one drops their price and then
00:01:38.700 you know half an hour later the next one does and then half an hour after that the other one does
00:01:42.760 but but what is it they're actually thinking is happening here that may be illegal potentially
00:01:47.080 well i think they're probably looking at conspiracy which is that uh the you know a couple of these
00:01:52.260 gas stations are gathering in the dark of night under you know dimly lit lamps on some street corner
00:01:57.400 and saying hey this is the price we're going to be setting for the next several days they may also
00:02:01.300 be looking at the wholesale price of gasoline which uh brings us into the whole ambit of you know why
00:02:06.520 are wholesale prices very similar between competitors um this of course has always been a concern
00:02:12.420 that you have you know three or four suppliers shell sorry excuse me pedro canada uh imperial
00:02:19.400 being the big players across much of canada of course there are regional players irving in the east
00:02:24.880 coast and uh to the west uh west coast chevron of course now of course which is uh uh parkland
00:02:32.360 refinery in in uh in uh in vancouver uh these are smaller players but they tend to look at the wholesale
00:02:39.320 price of gasoline they look at the canadian dollar and they come up with a uh formula which basically
00:02:45.120 suggests which way the price is going to go now in some parts of the country it's usually 48 hours
00:02:50.180 after the price or 36 hours i should say after the price is settled on u.s markets uh we get a wholesale
00:02:56.780 price indication that doesn't necessarily mean gas stations need to jump on it but in most major
00:03:01.800 cities across canada they do which of course is the reason why i began predicting gas prices well over
00:03:07.160 30 years ago um at the same time i was out writing a little report that lost in time reported the
00:03:14.400 liberal committee on gasoline pricing canada you'll see uh it's about 26 years old and uh yours truly
00:03:19.980 was was chair of that at the time i was concerned about the loss of competition particularly among
00:03:25.260 retail uh gas stations however this is always going to continue to be an issue we know that
00:03:30.600 gasoline prices tend to be also diesel prices tend to be jet fuel prices tend to be
00:03:35.760 heating home heating oil prices and so where energy prices go and how their influence
00:03:42.220 do with i think not just the political direction of this country but the whole issue of affordability
00:03:47.980 which is something i've been on for several years as you can see from above i have every expectation
00:03:53.140 that the competition bureau of course is being guided by new uh mandates uh the mandate of course would
00:03:59.780 be uh you know nudge nudge nudge wink wink we uh we want to make sure that there's no green washing 1.00
00:04:05.480 that is to say people making claims that they're doing something clean uh quote unquote uh anti-fossil
00:04:10.800 fuel uh when in fact they're not uh and so i think the the bureau itself has now gone from being you know
00:04:17.480 a defender a cop on the beat when it comes to competition to uh bringing in inviting some of the
00:04:24.000 political partisan considerations including climate change and of course uh the all the issues that
00:04:29.540 many taxes that go with it enter how many independent variables are there that are inputs
00:04:35.520 to gas prices in canada we have uh you have to watch in canada eastern canada so atlantic canada
00:04:43.140 quebec and ontario tends to follow the new york uh mercantile exchange or the the market at new york
00:04:50.000 is where our wholesale price comes from and that varies by day so if we're on a day like today where
00:04:54.880 it's up a couple pennies that could mean a one cent increase a couple pennies a gallon could mean a
00:04:59.700 center to increase come 24 hours 48 hours from now so uh we're likely looking at a scenario where that
00:05:05.700 would happen by friday um western canada so from thunder bay if you can believe it or not right up to
00:05:11.580 the uh right up to vancouver's uh limits uh the lower mainland is another market and that's really
00:05:17.720 driven by the chicago spot market and of course we have uh the vancouver lower mainland and victoria
00:05:24.460 so vancouver island is also influenced by what's called the pacific northwest uh market and that of
00:05:30.440 course means whatever happens in the united states tends to be the price we're going to pay within 48
00:05:34.660 hours at least gas stations will be forced to pay uh and including you have to include in that of
00:05:39.100 course the value of the canadian dollar very important to recognize because andrews uh many people
00:05:43.980 tend to overlook in their so-called you know millions of dollars in federal government subsidies
00:05:48.560 to come up with these studies uh that uh surprise nudge nudge wink wink antenna support the government's
00:05:54.460 position they tend to overlook the fact the canadian dollar continues to sink in 137 pennies
00:06:00.260 to buy one us dollar adds about 24 to 27 cents a liter to the price of gasoline and that's not even
00:06:06.480 including the issue of taxation they not the one but the two carbon taxes that we now have in canada
00:06:10.920 and to go back to the retail aspect of this how much latitude do uh gas companies have do you know
00:06:19.340 pumps pump stations have in their prices when these are going up and down i know costco you know
00:06:25.240 locally is notoriously good for having a few cents uh less but but but how much of a buffer do they
00:06:30.440 really have to to pad that out if they want to undercut their their competitors well you have to look
00:06:35.780 at what's called a retail margin and you have to look at your market if you have a lot of people
00:06:39.580 coming through so what they call throughputs you have a lot of uh you know 20 30 000 liters a day
00:06:44.000 and you have several hundred cars coming in then you know your your margin doesn't have to be as
00:06:48.620 high it could be seven six five cents at costco or you have other ways of cross subsidizing that as
00:06:54.540 costco would for instance with uh you know with uh uh rewards programs or better yet uh you know you
00:07:01.220 paying 60 65 dollars a year to uh to have access to their pumps i can't just walk into their pumps
00:07:06.400 without showing my you know my costco uh uh membership uh before getting that so that's a
00:07:12.000 bit of an advantage also the amount of fuel you can use if you can walk in and say hey listen i can
00:07:17.040 move a million you know liters of gasoline and one given a week or diesel the equivalent or supreme
00:07:22.760 you're going to get the attention of the refiner because the refinery runs you know 24 7 365 days a
00:07:29.600 year and so uh those who can move volumes tend to get a little bit of a better discount than say
00:07:34.000 you know barney's bait and tackle and uh you know gasoline emporium uh would uh in an off-site
00:07:39.260 you know a situation where they don't get a lot of traffic nevertheless it takes everyone pays
00:07:44.520 within a few cents the same for wholesale price of gasoline there are discounts casco costco might
00:07:49.880 get on a day like today where they rack price that the so-called wholesale price uh you know say for
00:07:55.780 uh regina being a dollar 4.9 might be buying it for 99 cents so they get five cents off any 1.00
00:08:01.400 competitors in the area because of the large volumes they can move uh they still have to have
00:08:05.960 a retail margin in order to cover the cost of honoring credit cards cost of uh you know of
00:08:11.960 keeping the plaza open paying the staff or whoever is there and that's why you know you can't do these
00:08:17.220 things for free we often see many variations in prices across the country even within cities where
00:08:23.340 some gas stations tend to have a lower price than others they hope that they can get more attract
00:08:27.400 more to their station by you know lower slightly lower prices but the really i think the story
00:08:32.900 here and i've said this for some 30 odd years now is that the real competition is at the retail level
00:08:37.860 the last eight or nine cents a liter and that's what it comes down to eight or nine cents is all
00:08:42.360 the gas station has control over and so you know if they suddenly remove that after 5 p.m in a given
00:08:47.940 afternoon and have zero margin they're running seven cents lower than everyone else obviously they're
00:08:52.780 going to get most of the traffic and there are many websites some which i've worked with in the past
00:08:57.160 gas buddy for instance which are devoted to letting people know when that happens how that happens where
00:09:01.560 the best deals are i wanted to just in in the last couple of moments i have with you here
00:09:06.420 point you to this tweet ryan turnbull who's a liberal member of parliament had shared uh this he
00:09:11.980 says a new report says canadian carbon tax did not cause hike in gas prices or inflation the
00:09:17.500 conservatives will deny this at all costs they just can't handle the truth so i would say and
00:09:24.300 i think you would agree that we can't say every increase in gas price has been attributed to the
00:09:29.520 carbon tax but the design of the carbon tax was to increase gas prices that was the point of it so
00:09:35.320 i don't know how the liberals are saying that there is no connection to increases and the carbon tax
00:09:40.460 it makes no sense and i was member of parliament for whitby for several years uh so i mean i know where
00:09:45.620 mr turnbull is trying to come from but when you get an organization that you pay 35 or 50 million
00:09:50.400 52 million to to come up with some kind of weird study that doesn't include some experts who know
00:09:55.000 what the hell they're talking about i.e me uh you know that there's a problem and uh you know that 0.60
00:09:59.880 this is uh from a political point of view and i'll put my 18 years as a liberal member of parliament
00:10:03.900 uh hat back on and say either you do want the carbon taxes to work to deny and to encourage people
00:10:10.600 to or discourage people from buying fossil fuels or you don't and uh so it's an argument if he's
00:10:16.480 making the argument this isn't inflationary then it obviously is not working which brings into
00:10:20.460 question mr turnbull and the liberal party's attempt at trying to suggest that carbon taxes
00:10:25.180 are indeed useful in fact they're extraordinarily expensive canadians understand that uh most do not
00:10:31.120 get back what they put in and not we're not just talking about fuel for transportation but also uh you
00:10:35.860 know energy costs uh things like keeping your your home heated uh and the cost generally as it cascades
00:10:41.160 through the economy of all these things you know we have a country with two carbon taxes virginia
00:10:45.060 being a very good example where you have 17.61 is the first carbon tax the second the clean fuel
00:10:50.840 standard the bc lcfs short for bc low carbon fuel standard um about 18 19 cents a liter now and that's
00:10:59.940 gonna be surprising i fought the government over there many years ago on this point when they said there
00:11:04.280 was 12 mystery cents it's actually about 18 or 19 now and that's because the cost of a credit carbon credit
00:11:10.120 which is about 500 which british columbia is very transparent about it's 500 bucks per credit
00:11:14.580 for every 110 dollars is four cents a liter so for that's according to the federal government's own
00:11:20.620 uh um uh riaz or uh regulatory implementation act uh study so for every 110 dollars of carbon credit
00:11:30.600 which is 500 today in british columbia it's four cents four cents times uh a break in 110 to five
00:11:38.360 from 500 you're talking uh uh 15.8 plus gst so you're about 18 cents a liter roughly for the second
00:11:46.380 carbon tax that's what's adding the cost of living more importantly last year at this time
00:11:50.760 canadian dollars 131 pennies to buy us dollar today 137 that's adding about two cents a liter the price of
00:11:56.720 gasoline that's a function of the fact that uh the world has very little interest in buying canadian
00:12:01.200 commodities and canadian currency it's a a tragedy uh before i let you go dan when should i fill up
00:12:08.640 well this weekend looks pretty good i would say uh by friday you'll see prices drop a little bit more
00:12:12.880 than they are now and right across the country an average decrease of about two cents a liter so
00:12:17.200 i'm waiting until friday to fill up uh some can get it take advantage of this tomorrow if you're in
00:12:21.120 canada i've just given the information out there uh diesel down two cents gasoline down 1.5 that's
00:12:27.680 likely to be good for thursday and friday quebec ontario uh it's pretty much the same down about a
00:12:33.600 penny and of course western canada you've seen prices spike up they're likely to drop about two
00:12:38.160 cents a liter uh with the lower mainland vancouver staying in the 181 181 183 range all right well
00:12:44.400 you heard it here first first everyone uh dan mctagg president of canadians for affordable energy
00:12:49.200 thanks so much for coming on dan really good to talk it was a pleasure thanks for having me
00:12:52.480 thanks for listening to the andrew lawton show support the program by donating to true north
00:12:57.120 at www.tnc.news