Thoughts about gas

Everybody who drives a car has probably thought about this recently, or heard somebody say this recently. Gas prices are freaking ridiculous!

Excuse me, but is this a joke?

That picture was taken about two weeks ago in Toronto, Canada. For the American readers who might not understand, that's $1.41 per LITRE (1 L = 0.264172052 US gallons). Now granted this was about two weeks ago, and the price per litre did quite a bit as of today's date (which is extremely odd because prices normally don't drop that much, but we'll get into that later). According to Tomorrow's Gas Price Today, tomorrow, May the 26th, gas is expected to cost around $1.30, while a barrel of crude oil will come in at about $98.30. Now generally, up until about two years ago, you could easily predict the price of gas on your own by dividing the price of a barrel by 100. Using this method, gas prices should be hovering around $0.98 per litre? So why the huge mark up?

Well 8% of the mark up is due to the sleezy tax grab in Ontario known as HST. For those who don't know before the summer of 2010, there were two sales taxes in Ontario, PST (Provincial Sales Tax) and GST (Goods and Services Tax, or the federal sales tax). During the summer of 2010, a new controversial sales tax was introduced, which would merge both the GST and PST, into one tax, the HST. So what right? You had to pay both taxes either way right? Wrong.

Many things used to be exempt from either the PST (gasoline for example) or the GST (no example comes to mind, haha). After the HST was implemented, the 8% PST was to be merged with the 5% GST, creating a universal 13% tax on all purchasable items, thus increasing the price of certain necessary commodities, for no reason, except to gain more profits...

Back to the main point at hand, gas is a consumable, and non renewable commodity. As people use more and more of it, there's less and less to go around. Which in turn drives up the prices to what we see today. Does anybody remember when you could buy a litre of gas for 40 cents? I do... Anybody remember when people were complaining about gas being 80 cents? I do... And I'll probably re-read this post some time next year, and laugh at how I was complaining about paying $1.30 at the pumps for a litre...

But why are the prices so high? Surely we're not facing a gas drought?! I know a lot of European readers would probably be laughing to themselves, while shaking their heads. Yes, it is true, gas prices in Europe are MUCH higher than in North America. But there's one key difference between a random European country and Canada. Canada has it's own oil. Canada refines its own oil. Others will blame the high prices on the insanity happening in the Middle East right now. Once again, Canada shouldn't be affected by this. But it is...

And I'll tell you why:

Canada is notorious for harbouring monopolies, and  having a sever lack of regulation. Canadian's pay exorbitant fees on almost EVERYTHING, be it cellphone bills, internet bills, TV bills, phone bills, alcohol, and yes, gasoline.  There is virtually no competition on any major front in Canada, especially in the domain of Oil Refineries. Lack of competition, coupled with the lack of government regulation and interference, allows the corporations to set any price they like, just because they can. What's stopping the refinery from charging Canadian's $1.40 per litre? Nothing at all. If you want to drive, you need gas. That's the bottom line.

How do you feel about this?