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Don’t expect gas help from government |
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Written by BRUCE STRACHAN
Citizen columnist
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Wednesday, 07 May 2008 |
Gas in Prince George is $1.29 a litre, crude oil has hit $122 US a barrel and there is no sign of either price going down.
What to do? Be prepared to dig deeper into your pocket or find an alternative.
Two things for sure: first, when it comes to the cost of any petroleum-derived product, prices will continue to rise; and second, the government is not going to help you out.
On the first, crude oil is a finite, depleting resource. No more of it is being made.
Moreover, refining capacity throughout North America is limited, a number of oil producing countries are - to put it kindly - unstable. Topping it all off, there is a rapidly escalating demand for oil in China and India.
Those two countries have the fastest growing middle-class economies in the world. They want their wheels; and not two wheels, but four.
All of this leaves us at the mercy of the petroleum market, which is hot, greedy and not about to change.
It’s supply and demand, with demand - and higher prices - winning.
This leads us to my second point, and the question, would a benevolent government help to lower pump prices?
In two words, forget it.
Governments have an unsavory interest in inflation as well as the sins of excess, which includes us roaring around in V-8 gas guzzlers.
Last year the federal government collected $5 billion in fuel taxes, plus $1.6 billion in GST on those fuel sales. Wow, talk about double-dipping.
This year the federal government take will increase as the price of gas increases.
Meanwhile in Victoria, the provincial government sucked up $938 million in fuel taxes last year and for 2008 estimates it will take in $957 million, plus $338 million on the new carbon tax.
To be fair to both governments, the feds Gas Tax Agreement kicks some of the GST gouge back and a recent extension to the agreement will contribute $11.6 million to infrastructure costs for the City of Prince George and the Fraser-Fort George Regional District from 2010 to 2014.
On the provincial scene, although both the fuel tax and the new carbon tax are predicted to generate $1.3 billion, the B.C highways budget expenditure is $970 million while the Climate Action Dividend payout is $440 million.
Transportation derived revenues and expenses are a saw-off in B.C.
But no matter how you slice it, governments will not, not should they, subsidize a depleting resource.
In fact, the better public taxation policy should direct us to reduce our dependency on an increasingly expensive commodity, and instead focus on alternative and sustainable energy policies.
Market forces work. In B.C., as gas prices have escalated, sales of compact and sub-compact cars have risen from 52 per cent five years ago to 60 per cent this year. Compact SUV sales are now 22 per cent of the light truck market, up from 16 per cent in the same five-year period.
Clearly, pump costs are influencing purchasing decisions. You can also bet compact car sales are going to increase even more as pump prices rise.
There is though, one area on the energy scene where the provincial government has to act and that’s the development of more sustainable energy sources. Most obvious is the Peace power development of the Site C dam. The Campbell government is moving quietly but steadily on this project and is probably waiting until after the May 2009 provincial election to put Site C into high gear.
Critics of big hydro must understand the best case to be made for smaller wind, tidal and solar energy producers - all with their own unique supply variability issues -- is the backup capacity of large hydro.
If we are to wean ourselves off natural gas heat, sustainable hydro power is the best alternative.
Local governments as well can help us with our ever-increasing pump-price distress by taking some of the $11 million in federal gas tax rebates and building bike trails, improving downtown sidewalk snow removal and cleaning up the urban core.
The economics of gas prices will force more people to look at downtown and it would be good to see a council ahead of the curve at making our city a better place to live.
As Bob Dylan wrote, “The times they are-a changing.”
In 1998, gas was 50 cents a litre.
Whether we like or not, those days are gone, forever.
Bruce Strachan is a former B.C. cabinet minister and Prince George city councillor. His column appears Thursdays. E-mail:
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Last Updated ( Wednesday, 07 May 2008 )
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