Rants

Here is the real reason gasoline prices are so high

Norris McDonald
Written by Norris McDonald
Photo by Norris McDonald
Esso agreed to take over the running of gas bars at some Loblaw grocery stories. They then rebranded the stations Mobil. This one is located in Mississauga at Eglinton and Erin Mills Parkway and, like most other GTA gas stations, hiked the price of gasoline by 4 cents a litre overnight Tuesday.

I find it interesting that when certain people are in positions of power, like being Members of Parliament, they love nothing more than to rattle the cages of the major oil companies over the price of gasoline.

Those people are quick on the draw when the price goes up a cent or two. In fact, I know one guy who became the “go-to” expert when it came to gas prices because he was always on the back of Big Oil.

Sooner or later, however, these folks wind up their political careers (or have it wound up for them by voters) and have to return to the private sector (which is such a nice way of describing the real world, eh?) and then, if they’re ever asked about gas prices that are sky-high, as they are in the Toronto area these days, you do not hear them questioning the morality of that gouging, like they did in the good, old days. What you do hear are those very same people making excuses for the oil companies. Some people would call this enabling.

Gas prices in the GTA (Greater Toronto Area) went up 4 cents overnight Tuesday. This is because, we’re told, the refineries are gearing up for summer gasoline-producing season and summer gas is more expensive to produce, apparently, than the gas they make for us to buy in winter. At least, that’s today’s excuse.Here are some others:

One day, the price of gas is linked to the wholesale price of gasoline being offloaded at the dockyards in Brooklyn, N.Y. (Or is that Buffalo, N.Y.?) The next day it’s predicated upon the price of crude in West Texas. A fire at an oil refinery in Compton, Calif., is good for a five- or six-cent hike. Now it’s because summer gas is more expensive to make than winter gas.

Who comes up with this stuff? Do they have a team of writers, like Saturday Night Live, sitting in a room and thinking up outlandish reasons to justify their arbitrary pricing – which sometimes change, in tandem and at the same time, three or four times a day, for a product everyone depends on? Can’t you just hear those guys?

 “Hey, how about we say the price of gas went up today because there was a train derailment just outside Denver, Col..” And another guy will say, “Nah, Canadians get their gas from a refinery in New Brunswick that makes the stuff out of oil from Saudi Arabia.” And the first guy will say, “Canadians don’t know that. If anything, they think it comes from Alberta. Go with Denver.”

I am here today to tell you the real reason the prices are so high. And why they will get still higher and why they will then come back down.

The oil companies are scared stiff of electric cars and seeing them as being a serious threat. If people should ever go out in droves to purchase Evs or hybrids, they won’t be buying gasoline; or as much, anyway. That, over time, will cut into the profits of the oil companies and piss off their shareholders.

To keep the EV challenge at bay, the oil companies have been keeping the price of gasoline down. The cheaper the gas, the less likely the Average Joe will buy an EV. This strategy is succeeding. If  you talk to car dealers in any country in the world, they will tell you that the EV and hybrid market share is holding at about 1 per cent of total sales, and that includes emerging markets like China.

So if the wolf has has been chased from the door, albeit temporarily, the oil companies have decided to take a breather and make some money. They will make hay while the sun shines. The price around the GTA today was about $1.34 a litre. By July, that will be up to around $1.50, or so. By August or September, EV and hybrid sales in Canada will start to increase, as a result of the price of gas,  and the oil companies will be forced into bringing down the price in order to protect their market share.

You watch. By Christmas, it will be back down to $1.20, or so.

But by then, the refineries will be pumping out “cheaper” winter gas, don’tcha know, so that will explain the price drop. Or maybe they’ll come up with another reason. I mean, those guys sitting around in that little room will have to have something to do.


Whatever. I just think it’s too bad that some of those experts we once-upon-a-time came to depend upon for the truth, aren’t doing any talking these days.