The introduction, or should I say, the force feeding of the Ontario carbon cap-and-trade, and the Alberta version, which they prefer to term a carbon “levy” were, and will be, dominate factors affecting prices in both provinces as well as Quebec.
While the Ontario Government gave substantial forewarning of the intent to apply the cap-and-trade throughout 2016, announcing the amount for gasoline would be about 4.3 cpl, they forgot to mention that this amount would be higher by 13% because the HST would tax this tax, which had been buried in the wholesale prices as posted by the oil companies.
So when you incorporate the retailer’s margin, the increase at the pumps ended up being 5.0 cents not 4.3 cents.
In Alberta the carbon levy was not contained in the wholesale price but added on as a separate item after all the other factors in the pump price formula were totaled that being a flat rate of 4.49 cpl for gasoline and 5.35 cpl for diesel.
Among other criteria, these taxes do not apply to farm operations or fuel sold for exports.
Does this mean that Alberta crude refined into gasoline and diesel say in Edmonton will be subject to the carbon levy, which Albertans will pay for, yet the same fuel destined for the USA will be carbon levy free?
If the same logic or mechanism is to hold for Ontario and Quebec refined products then the economies of all three provinces will be at a severe disadvantage versus their neighboring U.S. states as the costs to produce and ship manufactured goods or commodities from any of the three provinces will be overpriced when compared to the U.S. version.
Unless the U.S. has a carbon penalty plan in concert with Canada then we are fiddling while the economy burns – and the chances of President-elect Trump demanding a carbon tax to save the world from climate change is, to be polite, remote to non-existent.”
Roger McKnight is the Chief Petroleum Analyst with En-Pro International Inc.
Roger has over 25 years experience in the oil industry, and has held senior marketing management positions responsible for national and international accounts. He is the originator of the card lock concept of marketing on-road diesel that is now the predominant purchase method of diesel in Canada. Roger's knowledge of the oil industry in North America, and pricing structures has resulted in his expertise being sought as a commentator by local, national, and international media. Roger is a regular guest on radio and television programs, and he is quoted regularly in newspapers and magazines across Canada. All posts by Roger McKnight