Juno News - Why is gas so expensive in Canada？

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

Juno News - July 28, 2024

Why is gas so expensive in Canada？

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