The Truth About…: Gas Prices In Canada

Opinion by Darren Clarke, March 10, 2022

“Why are gas prices so high?”

This question, generally muttered with a few colourful expletives thrown in, has been plaguing Canadians the past month. Despite how confused and passionate public conversations can be on the topic however the answer is straightforward.

I worked at a gas station when I was 19-20. I know how passionate a topic gas prices can be for people even when at relatively modest price points of 30 to 50-cents. I can see myself, standing outside Sears Gas bar in 1991, absently holding a gas pump, dressed in a Sears Gas jacket, collared shirt and red clip on tie, speaking over the sound of the Violent Femmes blasting from the kiosk, explaining to a customer, “Surprisingly, they don’t ask for my input on setting gas prices…”

As an adult I get why people care about gas prices. We live in a car-centric world where gas prices deeply impact our bottom line. The kind of massive jump in prices that has corresponded with the Russian invasion of Ukraine scares people. That is fair.

First though, let me say the number one tragedy of the Russian invasion of Ukraine is the death and destruction wrought on Ukraine and its’ people. Everything else pales in comparison and really, shouldn’t be compared at all. I strongly believe we should support Ukraine urgently and comprehensively simply because assisting our fellow man when they are preyed upon by a psychopath and his armies is the right thing to do. This article however will concern itself with gas prices- Why they are high, what makes up the price of gas, what our expectations should be, along with why the conversation is so consistently waylaid by distorted narratives.

Let’s start with the leading narrative on social media pages- The Federal government’s carbon tax.

Why do we have a Carbon tax? How is it applied? How does the Carbon Tax and other taxes impact gas prices?

To cut to the quick the Federal carbon tax is 8.8-cents per litre in Ontario. This hasn’t changed in the past months. Let’s take a moment though and consider why this tax exists. breaks down why we have carbon taxes as, “When fossil fuels such as coal, petroleum and natural gas are combusted in order to generate power for various machinery and uses, carbon dioxide is emitted into the atmosphere. This contributes to the greenhouse effect of the Earth’s atmosphere, where heat gets trapped inside the atmosphere, being absorbed by its immense amount of ocean surfaces and heating up the average temperature of the planet. Through many scientific models of climate, it is unanimously understood that a shift in average temperature will have devastating effects on the livability of the planet, including its oceans and land.”

The Carbon Tax is a response to an established threat to the present and future of humanity posed by our use of destructive fuels. The idea attached to the carbon tax is to disincentivize the use of fossil fuels, encourage a change in how we interact with our environment and promote the use of more sustainable forms of energies.

Is this the best method to make positive change? Probably not. But it’s the one generally agreed upon to be the least unsettling for the status quo. Despite how much the carbon tax concept has been warred upon by the representatives of pro-fossil fuel forces, the various government mechanisms that have accompanied the implementation of the carbon tax has lead to some, albeit modest, results in creating positive environmental change.

The Carbon Tax often gets framed as a strictly left-wing/Liberal undertaking but it hasn’t always been that. Various versions of the carbon tax have been advocated by Conservatives like Stephen Harper in the past and the notion itself is supported by the business community reluctant to be impacted by more aggressive measures. The recent Conservative embrace of a rabidly anti-carbon tax agenda has appeared to be largely based on their seeing a political advantage to manufacturing outrage to the tax.

What’s the bottom line for the average person in terms of the financial impacts of us trying not to destroy ourselves?

The Canadian carbon tax has two parts: a carbon levy on fuel purchases and a big emitters program for industrial facilities. For our purposes we’ll ignore the industrial side of things and focus on how it most directly impacts the every day person.

How the carbon tax is applied varies from province to province. For provinces that choose not to design their own measures to comply with the overarching goals of cutting emissions the default Federal methodology applies. Moreover, the carbon tax is generally made revenue neutral through a rebate program.

It’s important to remember that for the greater percentage of Canadians the costs we are about to look at are offset, in part and often in whole, by a rebate.

The carbon tax started at $20 per ton in 2019 and has risen $10 per ton each year making its’ pending April 2022 rate $50 per ton. breaks down the bottom line as, “Under the carbon tax levy, filling up your gas tank costs 8.8 cents more per litre until April 2022, when it will rise to 11 cents per litre.”

8.8 cents a litre in Ontario. And that hasn’t changed recently making the substantial increases in the price of gas entirely unrelated to the carbon tax.

In Ontario the provincial gas tax is 14.7-cents per litre of unleaded gas.

At this point I feel like we could use a nice chart that breaks down the costs associated with a litre of gas. The website neatly illustrates the costs associated with a litre of gas in Ontario relative the price point of $1.50-

Keep in mind here that of all the taxes, GST/HST is the only one that isn’t a flat rate and varies depending upon the price, i.e. the more gas costs, the more your GST/HST is.

There’s a lot to digest there but the main takeaway has to be that if you’re wondering why gas prices have gone up recently- Taxes aren’t the reason. I’m not here to tell you that the various federal and provincial taxes on gas aren’t substantial but I am here to tell you they are absolutely not the reason your gas prices have gone up substantially. If someone is telling you something different you should be asking why they are lying to you. But more on that later.

Let’s focus for the moment on the question at hand- “Why are $!###! gas prices are so high?

Opportunism and The Consequences of War

“The largest oil and gas companies made a combined $174bn in profits in the first nine months of the year as gasoline prices climbed in the US, according to a new report.”

The Guardian, December 2021

Oil company profits have been accompanied by massive stock buy backs that reward investors. In either case that’s money coming out of your pocket into someone else’s. Unlike various taxes none of that money has any interest in giving back to the community.

There can be no doubt that Russia deciding to attack Ukraine threw the world order into flux and is having an impact. That impact is a mix of speculation, reasonable pragmatism and the worst kind of opportunism, as in, “This war provides us with an excuse to make more money.” I won’t do a deep dive into breaking down the mix of market forces but know this- Oil companies and investors are not taking any hit to their pocketbook here, only you are.

That’s really your answer here as to why gas prices are so high- greed.

Note: This captures impacts for twelve months so while the Carbon Tax increase you see here is from last April 2021. As mentioned the price increase over the past month has not been impacted by carbon tax.

Not a surprising answer I guess if you consider that greed, gluttony, is at the root of almost every larger problem humanity faces.

What do we do about high oil prices?

The question of what to do about high oil prices is simple. Decrease our reliance upon oil. The less we need it the less the price matters. To get there though requires significant change. To make that change we need uncorrupted, thoughtful, political leadership pushed by meaningful public discourse.

Oil companies have long known about the destructive nature of their product. The lure of trillions of dollars in profit has been too great for them to change and instead has lead them to actively work against change. To that end, it’s reported that Exxon knew of climate change as early as 1957. Over the past decades further evidence of how much oil companies knew and when has continued to be reported upon.

“Present thinking holds that man has a time window of five to ten years before the need for hard decisions regarding changes in energy strategies might become critical.”

James Black, Exxon’s Products Research Division, 1978

Similarly a Guardian article from 2018 reported on Shell Oil documents from 1988 wherein analysts vividly broke down the consequences of continued oil use on humanity, “Shell’s analysts also warned of the “disappearance of specific ecosystems or habitat destruction,” predicted an increase in “runoff, destructive floods, and inundation of low-lying farmland,” and said that “new sources of freshwater would be required” to compensate for changes in precipitation. Global changes in air temperature would also “drastically change the way people live and work.” All told, Shell concluded, “the changes may be the greatest in recorded history.”

They knew.

They knew and chose continuing to destroy our living environment for profit over change. Oil companies and their investors knew the consequence of the product they were profiting off of but felt insulated from the consequences of it. Who pays for the consequences of climate change that Shell outlined? That would be you as well.

Oil companies tools for maintaining these destructive ways have been a massive propaganda machine promoting a car-centric culture, buying politicians and making communities so dependent upon oil production (i.e. Alberta) that they feel compelled to corrupt themselves through self-interest.

How that manifests itself in Canada is all manner of self-serving Energy sector PR firms, and various shades of tepid political action. From the passive-aggressive carbon tax system and cautious cultural change advocated by centrist and left-wing political parties, to the corrupt denialism, oil company bailouts and highway building, supported by Conservative party of Canada- the oil companies have been very successful in undermining real action. Their preferred tool of blocking change is the Conservative party in Canada that not only echoes propaganda talking points of the energy sector they also manufacture misleading and inflammatory propaganda to confuse public discourse via social media outlets like Canada Proud/Ontario Proud, The Post Millennial and the various American hedge fund owned media support system attached to the extensive Post Media outlets like- National Post, Financial Post, The Province, Vancouver Sun, Calgary Herald, Edmonton Journal, Regina Leader-Post, Saskatoon StarPhoenix, Ottawa Citizen, The Londoner, Windsor Star, Today’s Farmer, The Community Press, The London Free Press and The Paris Star.

What do we do?

Hey, if it was up to me I say we nationalize all oil companies throughout the world, confiscate their ill gotten gains and look to ween ourselves more urgently off of oil. But that’s not likely to happen.

Leaving us with more humble actions for positive change- Don’t elect Conservative politicians. Don’t follow corrupt right-wing news sources. Have informed conversations with your neighbour and your local elected representative. Demand real action politically while simultaneously acting to reduce your own carbon/gas consumption as much as you can.

The corporate/Oil company playbook in action now is, as always, the problem presenting itself as the solution. Thus, their solution to the ills of oil dependency in Canada is to increase our oil production and and continue unhealthy levels of use. Their solution is for us to continue to subsidize their profits in a myriad of ways, direct and indirect. Oil companies have proven themselves reliable only in providing no real solutions to the problem they’ve created, committed only to continuing to profit off their a wholly destructive product. They have proven themselves uninterested in humanity being unshackled from the death spiral they’ve induced.

That’s where we are. Tethered to the what ails us.

There’s lots to talk about, lots to do. In the meantime try and remember to not get mad at your local gas bar attendant. Trust me, they don’t set gas prices and they aren’t remotely interested in having a conversation about it. Talk to them about the instead about the weather or, even better, how amazing the first Violent Femmes album was.