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Don't like gas prices Blame the government

Author: David Maclean 2004/05/04
It's an annual ritual in Saskatchewan, as predictable as snow melting and leaves budding. Each and every spring we shake off our winter sleepiness and gape in awe at the price of gasoline.

Gas prices tend to spike at this time of year because people in North America start driving more. Gas supplies drop while demand increases, and that dynamic is reflected in the price we pay.

In addition to the bears and insects that make their first appearance at this time of year, the gas price conspirazoids come out of hiding. They make astonishing claims that the oil companies are in cahoots and keeping our gas prices high. They say "Big Oil" is robbing us blind at the pumps and call for government inquiries into the matter. After labour day, the gas price conspirazoids go back into hiding.

By now the paranoid conspiracy theories should be fully debunked. Still, they keep coming back like a bad dream - despite the litany of investigations over the years by various levels of government that have never found a lick of evidence to support them.

Gasoline prices, for the most part, are determined by natural market forces. Sure, some people are making a lot of money right now with sky-high oil prices - particularly those integrated oil companies that produce gasoline from their own feedstock. Also consider widows whose pension cheques depend on investment portfolios that include oil company stocks. Many people who invest in mutual funds - and that's not just rich folks - profit from the success of corporations, including oil companies.

Nay, do not point your fingers at oil companies. Instead, point your finger directly at the federal and provincial governments. For it is they who take up the biggest chunk of the price of gas. As it stands, 35 per cent of the price of gasoline is made of one tax or another. The feds take 10 cents a liter in the form of an excise tax. The province of Saskatchewan takes 15 cents of every liter. Also remember the GST, which applies to the fuel and to both of the aforementioned taxes.

All together, the federal government rakes in $5 billion a year on gas taxes alone. $1.17 billion comes from GST. Of the billions collected by Ottawa at the pumps, only three per cent goes back to communities for road maintenance.

Even if we generously factor in everything Ottawa loosely calls infrastructure, things like canoe museums and bocce ball courts, the Liberal government returns less than one tenth of what it has collected at the pumps in the last decade. This kind of profit margin makes the Big Oil industry look like a corner store operation by comparison.

It's time we started asking smarter questions about gas prices. We need to question why the government needs to take a share of our gas money. We need to ask why the government doesn't return more of our money back to municipalities for roads and infrastructure. We need gas tax honesty.

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