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Gas-gouging Politicians

Author: Victor Vrsnik 1999/11/27
Consumer Affairs critic Jim Penner is blowing smoke for demanding yet another tiresome review of gasoline prices. Why not try something out of the ordinary and propose an investigation of monopolistic gas tax gouging instead?

Rarely do you hear a peep out of politicians -- hot and bothered by those demonic oil barons -- about high gas taxes. And for good reason: if they were to raise hell about gas taxes consumer rage would be targeted at the politicians themselves.

For the last twelve years, the Tories did next to nothing to lift the burden of gas prices off consumers apart from commissioning costly, useless and inconclusive investigations on price fixing. The Tories raised provincial gas tax rates 43 per cent over the past decade from 8 cents per litre in 1989 to 11.5 cents per litre today.

To elude detection, they blamed high pump prices on the oil companies.

Do the oil companies want to make money? Of course, it's normal. It's the reason why they are in business. What's abnormal is that the federal and provincial governments make far more off of each business transaction at the pumps than do oil companies or retailers.

Both Ottawa and the Province take over 40 per cent of the pump price, leaving the gas bar retailer with an operating margin of about 12 per cent. The rest is split between crude costs and refining.

The pump price today for regular gas excluding taxes is only 36-cents per litre. Not terribly unreasonable considering gas prices, adjusted for inflation, have actually fallen since 1957.

It's the 26-cent per litre tax on top of today's pump price that goes unchecked. And forget about the user fee argument. Of the $5 billion in fuel taxes collected by Ottawa, only 5 per cent find its way back into our roads.

Unlike the feds, the previous Manitoba government can take credit for spending 76 per cent of provincial gas tax and motor vehicle fee revenues on Manitoba roads in 1998.

Motorists are right to be angry about volatile pump prices, but most of that frustration should be reserved for government.

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