Ideas to keep Gas Prices Fair

[Redeye]

Well to start we refine our own crude in Canada, then when we reach the quantities we need we say FU to the middle east, and sell OUR fuel at our own price.

If you look at the big countries in OPEC, there oil supplies are running down, so it is in there best interests to reduce what is produced.  Otherwise when there oil runs out, so dies there ruling powers money and protection from the US.

Two problems.  First, it's damned near impossible to build a new oil refinery in Canada because of the environmental regulations and approvals required.  I used to live in Oakville, Ontario, where Petro-Canada dismantled an entire refinery complex and shipped it piece by piece to Pakistan, because they decided that it was not economical to upgrade it to meet environmental standards it needed to reach.  I think it was able to process 60,000 barrels of oil a day, if I remember correctly.  There's also no infrastructure to ship refined products eastward as I understand it, which is why Alberta oil goes south.

Second problem is NAFTA's proportionality clause.  We can't stop exporting oil to the USA basically, they would have cause to bring a claim in court against us for doing so - and besides that oil companies wouldn't sell oil in Canada if they could export it for a higher price, it's that simple.

At the end of the day, realistically, high gas prices are a good thing - we have to break our dependence on oil and higher prices will wean us off the stuf faster.  We just need to work on technologies to replace oil faster than we have been doing.

I did like that diesel prices didn't move when gas prices shot up - so I parked my Rabbit for now since my wife is walking to work now and am driving my TDI instead.

 

[Osotogari]

For better or worse, we are stuck with high gasoline prices for a while.  However, any political interference other that ensuring there's no collusion or illegal activity would be economically or politically disastrous.  The last time that was tried in Canada, over 200,000 people practically lost their jobs overnight.  It would be even worse this time as other parts of Canada's economy are going through trouble.  

Well to start we refine our own crude in Canada

We already do that.  Refineries take a lot of time and billions to build and workers we currently don't have.  

then when we reach the quantities we need we say FU to the middle east

We have already acheived that, between the oilsands and the oil off the east coast.

and sell OUR fuel at our own price.

Basic economics with an internationally traded commodity make that impossible.  That's precicely what Trudope tried with the NEP, and it used to be a big thing among Marxist thinkers like Pierre Trudeau and to a certain extent, Hugo Chavez, but anything they did was to provide for their political backers.  A lot like Dion's Green Shaft program.    

 

[aesop081]

Well to start we refine our own crude in Canada, then when we reach the quantities we need we say FU to the middle east, and sell OUR fuel at our own price.

If you look at the big countries in OPEC, there oil supplies are running down, so it is in there best interests to reduce what is produced.  Otherwise when there oil runs out, so dies there ruling powers money and protection from the US.

Another one who slept through economics class.......

 

[Bane]

 A lot like Dion's Green Shaft program.

A carbon tax is not Marxist. I am not advocating a carbon tax, but unless you reject anthropogenic global warming, a carbon tax is eliminating a market externallity which is a critical step to pushing the market towards pareto optimum.  It's too bad that it was the Lib's that drummed it up, Harper, under different circumstances, could have sold it.  But as a concept it is vastly more in line with Neo-classical economics than Marxist thought.  I wouldn't want to be the guy to try to sell it though, and there is certainly potential for it to sucker punch the economy.

 

[SeaKingTacco]

A carbon tax with broad and near total cuts to income and business taxes might work- too bad that is not what is being proposed by the Liberals. It is more "carbon tax and we will give tax cuts to those we think deserve it...maybe, if our new social spending doesn't soak up all the new money first".

 

[Osotogari]

A carbon tax, as it is set up under green shaft and the Kyoto accord, is nothing more than a transfer of funds.  Under the green shaft, it would go to end up in spending such as was seen in the HRDC scandal.  Having recently visited BC and having spent an extra 22 cents per litre in Golden than I did in Calgary, I can't think of a carbon tax being anymore than a big money trough for Liberal patronage pigs.  Since we were talking about keeping gas prices fair, I can't think of anyone in BC under a fixed income or with bills to pay being happy about their situation.

 

[NL_engineer]

Another one who slept through economics class.......

Well yes I did skip/sleep through it, but I had the second highest mark in the class 96 % overall (my highest high school mark; besides gym of course)

 

[a_majoor]

This thread keeps getting recycled (I am pretty sure there was something in the Newsroom when gas prices were regulated out east, and probably a few in Canadian Politics as well) due to the poor state of education in Canada. You would think that economics 101 would have exposed the fallacies of regulating prices (for any product or commodity), and Canadian History 101 should teach everyone the dangers of attempting to manipulate the economy (examples like the NEP and price regulation in the Maritimes are within living memory of most of us).

Prime Minister Harper's comments about the dangers of a new NEP ("the Green Shift") creating regional instability and undermining national unity were based on history and (for him) personal experience: the NEP and manipulation of government contracts to favor Quebec over the lowest bidders resulted in the creation of the Reform Party, the decimation of the Liberal Party west of the Manitoba border and Mr Harper's own entry into politics as a Reform MP.....

 

[c_canuk]

to regulate fuel prices, you would first have to secure a source of crude. International agreements we are locked into require we sell all oil on the global market, and even if we dissolve those agreements, the private companies aren't going to sell for less at home when they can get more abroad

conclusion, we cannot get cheaper oil unless be both alienate all our trading partners AND our economy by nationalizing out oil fields and the companies drilling. Nationalizing the oil industry in Canada will cause problems with loss of jobs and wages - the high price of globally sold oil pays the oil field worker's wages and makes it feasable to use the tar sands creating jobs.

you would also have to refine it and sell it as fuel at far lower than global prices. to do this you would have to either start a crown corp or nationalize the current private companies. Privatly owned refineries are not going to sell in canada at a lower price when they can sell for more abroad. If you start a crown corp that sells cheaper here than the private companies they will send all their refined fuel out of country rather than sell to us, causing our reserves to deplete faster, and possibly shortages as refining capacity owned by the crown corp could not keep up.


so unless you advocate:
- taking a massive hit to our economy in cutting wages, taxes, and jobs
- dissolving international agreements that would impact us hugely in other markets
- nationalizing private companies depriving stock holders and citizens of potentially trillions of dollars in assets

you can't affect the price at the pump. Even if you did you would only lower the price a few cents as Canadian crude is only feasible to obtain when the price is around the current pricer per barrel.

the only sure way to lower the price is to lower the fuel tax to the ammount needed to maintain the road system ONLY which is what it was for to begin with, or switch to a cheaper fuel.

Personally I want to see 20 new nuclear reactors of modern design next to the uranium mines (back fill depleted sections with spent fuel) to eliminate all fossil fueled electrical generation stations, and use the off peak hours to fuel a hydrogen pipeline economy phasing out oil, and eliminating CO2 emmissions from fossil fuels.

 

[foresterab]

I see alot of issues here but much of it is missing some hard reality regarding oil and gas.  We think of these as a common product that we put into our gas tank but in reality crude oil has very different chemical characteristics that mean that despite Alberta's large crude oil production much of it can't be refined in Canada as it stands.

Convential sweet oil (Texas crude benchmark) which we hear about in the news is the normal oil that most Canadian refineries process...including all the refineries in Eastern Canada.  However oil from the oilsands and other unconvential sources have higher sulpher and other chemical content which means that we have to literally refine it twice...run it through an upgrader facility to strip some of the chemicals out of it so it can be transported safely via pipeline without corroding the pipe.

It is for this reason you've seen partnerships with outfits like TransCanada and Conoco where one upgrades or builds the pipeline to handle unconvential crude oil while the other partner upgrades a refinery to handle it..unfortunately almost all of these are in the Gulf states.

NAFTA states that a fixed percentage of canadian gas and oil production must be sent to the US (a really stupid agreement) so cutting off production is not an option.

What I would like to see however is either a cap on how much price can be raised in a day (say 3 cents) to avoid massive spiking and also giving both federal and provincial jurisdictions power to fine for gas stations that fail to reduce prices as quickly as they raise them.

After living in NE BC a few years ago and having the local gas price not change at all for 13 months you can not tell me that market price is the reason...we could drive 20 minutes south and save $0.20/L for most of the winter.

In addition gas stations are dictated to charge rates depending on which hauling zone they are in...Edmonton is a higher rate than 30 minutes north of it yet prices don't come up again until you're about 3 hours north of Edmonton to match.  Disclosure of the total cost (market price, federal tax, provincial tax, hauling, and refining profit) should be on each gas reciept to allow consumers to better focus their anger upon where it belongs.

 

[Harley Sailor]

Well yes I did skip/sleep through it, but I had the second highest mark in the class 96 % overall (my highest high school mark; besides gym of course)

Then you must have been asleep when they covered the part about selling to the highest bidder.

 

[Snafu-Bar]

Brian Molroneys subsequent raping of the lands before retiring to Jamaica.  :threat:

NAFTA needs to be shredded and never talked about again. Mulroney should be holding it when we put it them in the wood chipper for destruction  >


Cheers.

 

[c_canuk]

it doesn't matter if NAFTA gets shredded, the private companies are still going to sell to the highest bidder, that's going to be the global market unless you want to charge higher prices for gasoline in Canada than the rest of the world.

 

[NL_engineer]

Then you must have been asleep when they covered the part about selling to the highest bidder.

With the US economy going down the drain, and ours to follow; the oil companies will/are going to lay off their work force, as demand declines (US consumption down 5% according to the news yesterday).  

Selling at a lower price reduces profits, but sales should increase, therefor the big companies make less, but still make money (they can only lower production so much before it becomes to costly, and are forced to shut down or sell for higher prices thus helping inflation push us down the drain).

If we were in an economic boom, it would be different.  But when you look at the price change in goods and services over the past year, you can see the differences in prices (not just oil/gas) from a few months ago.  


So it may look like its not economically sensible for the companies to lower prices now, but when demand drops out of the picture (at 95% now) what happens?

 

[Harley Sailor]

The hardest part to swollow about high gas prices is that they only jumped in North America.. The price of oil has been dropping.. Which means OPEC had nothing to do with it...

The big gas companies jumped the price of gas only because they could.. They know when hurricane season is.. I'm sure they could up production the month before and stock pile.. A planned shut down would mean no lose of production and the prices would not have to jump.. They could even look good by letting people go home to deal with the up coming storms.. Instead they cry about having to shut down the refineries..

Why is our gas prices going up in Canada because they had to close the refineries in the good old US of A.. Have they had to up production at the Canadian refineries to make up the lose?

 

[Redeye]

I was just taking a look at Google Earth and Wikipedia - and the amount of refining capacity that probably was knocked offline by Ike is staggering.  More than double the entire refining capacity of all of Canada is in the Houston/Galveston/Texas City area, and more in Corpus Christi and other points along the Gulf Coast in Texas.  To compare, Canada's total capacity is about 2.5 million barrels per day.  That small area of Texas can process over 6 million barrels per day - and Corpus Christi about another 700,000.  Given that US refineries tend to be either running close to peak or down for maintenance, which happens regularly, that's a huge kick to get and it's no wonder wholesale gasoline prices shot through the roof in North America.  I wonder how many of those refineries are damaged by the storm and what capacity loss there is - hopefully it won't last too long.

 

[gaspasser]

...keep on target...
Maybe the Big Oil CEOs should earn and live on what a normal-middle income earner makes for one year.  That would help them cinch thier belts a bit and knock down a couple of cents or two on the price.  When Big Oil cries they're hurting and then post $1,000,000,000 + profits for the year, I call that gouging the consumer.
Isn't it during Ramadan that the devout muslim fasts and gives charity to show that all are equal?  But I'm not spouting Communism, which doesn't work.
Is the price going up in countries outside North America?  I've heard that the UK pays big for gas.  What about other countries?
Me, I'll be doing what the normal common man lately does...get a smaller, less fuel consuming vehicle for the family. 


...Oh, and just plain sucking it up!!!  Buttercup!!      ;D

 

[foresterab]

Harley,

With the exception of the couple of small refineries in western Canada almost all our western Canadian production (Yukon, NWT, BC, Alberta, Sask.) is tied in via pipeline networks that lead towards the Chicago area of the US and then enter the US pipeline network which takes it down to the Gulf States.  So basically we export crude and import refined materials...hence the reason the US refineries kill us so much.  We do a smilar trade in /pulp/paper, wheat, metals, etc...it's processed in the states while the raw product is produced in Canada...a much more inefficent process and a large part why economic productivity is so different between the two nations.

In Eastern Canada they buy crude oil off the world market and have it delivery via tanker to be refined at the local refinery.    There is one pipeline if I recall correctly that connects western Canada with eastern canada...that's it.  And its only a 36" pipe which is very small for major line.  Most major pipelines are 48" or larger in size.

Hope it helps

 

[Ex-Dragoon]

Go to Europe...they have been paying astronomical prices for a long time for gasoline.

 

[TheHead]

Go to Europe...they have been paying astronomical prices for a long time for gasoline.

How much oil does Western Europe have though compared to us. I've been looking for figures but have come up nil with stats.

  We are getting raped at the pumps and government is allowing it.  We have the 2nd largest proven oil reserves in the world are you telling me Oil Companies even if they were forced to sell gas at lower prices wouldn't tap into it?  Give me a break. Most of it is fearmongering look at the Alberta royalty review that caused such a piss fest in oil companies. They said if we raised taxes they would stop surverying and drilling, well kids they didn't. 

Granted the oil sands is a less impure form of oil and it does cost a lot to get flowing but we have plenty of reserves around the Lloydminster, GP, Medicine Hat and throughout Sask/Alberta.  It costs 40$ a barrel for Oilsands oil to turn a profit, less in other areas of Canada, Oil is at 97.00 right now.


Edited because I don't want to sound like an asshole.