Shopping thanks to lower gas prices? Free advice: keep your receipts

So I’ve heard that walking is good for your mind and body, which is good because I’ve also heard that they are, at most times, connected. I tried walking for a couple of weeks but succumbed to the throes of boredicius terminello, which students of Latin will know as “terminal boredom.”


Walking involves a whole bunch of footsteps. Taking footsteps and hearing footsteps are at completely different ends of the fear spectrum – the former rated at zero, the latter at 10. Consumers of diesel, gasoline, and all transportation fuels should take a peak over their shoulders because those footsteps we are hearing are getting ominously closer and louder.


This meandering Johnny Appleseed energy report opening refers to the real threat of a carbon tax being levied nationally to mimic the tax grab examples as set by British Columbia and Quebec. With the free fall of crude prices, the bottomless well of tax revenues as collected by the biggest tax collectors on the planet – the oil industry – has begun to dry up.


With pump and rack prices deviously low and consumers distracted by how much more time and money they can spend at the big box stores, such green hued luminaries as the former U.S. Treasury Secretary and the chief economist of the Conference Board of Canada are in barber shop harmony in saying, “Conditions today are ripe for policy action.”


Here’s some free advice… keep your big box store receipts.


The mantra nasally megaphoned to the tattered consumer is that a tax on carbon is an effective weapon against climate change – meaning that the additional monies will most likely be an effective weapon to increase the flow of tax dollars that end up in the financial black hole referred to as General Revenue.


In 2008 Ontario joined Quebec, B.C. and California in signing the Western Climate Initiative. In 2008 B.C. also introduced a carbon tax that is still in effect today with gasoline set at $0.067/L and diesel at $0.077/L. These taxes are levied at the end user level, not added into the rack prices. On January 1st this year, Quebec applied a cap and trade program which increased gasoline by $0.0323/L and diesel by $0.0411/L – both of these increases are built into the rack prices. Ontario has yet to act after seven years, but is about to, and I would guess they will go large at about a tax of $0.07/L.


In B.C. it was initially claimed that emissions dropped by 17% but this was actually a consumption decline as cross border traffic doubled with consumers going south to buy their gasoline. Since 2008 gasoline consumption has increased in B.C. by 8.9% while in Ontario, with no carbon tax, consumption has increased by only 3.4%. So B.C. is producing more emissions now than the day that the carbon tax was introduced.


With Quebec now into the carbon game, the highest priced cities for gasoline are Vancouver and Montreal. The total gasoline tax structure in Vancouver is $0.484/L while in Calgary it’s half that at $0.242/L. For diesel it’s $0.439/L for Vancouver and $0.187/L for Calgary.


Looks like Calgary is the place to do business! These carbon taxes are subject to change.


May I remind you that the gasoline excise tax was introduced by the then Liberal government in 1975 and was set at $0.10 per gallon ($0.022/L). This excise tax was brought in to dissuade consumption and encourage conservation of energy products such as gasoline.


Sound familiar?


Today that excise tax has increased to $0.45 per gallon ($0.10/L) and needless to say, consumption has increased not decreased. Government has increased and not decreased.


Those footsteps we are hearing are echoes from the past and may be the footfalls to the future.


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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.

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