Canada is a producer and Net exporter (to the USA, etc.) of oil which is used to producer gasoline to run our car and auto vehicles. Car and auto gas prices are set on oil prices, as measured by the "barrel of oil". It costs us in Canada about $40 to produce a barrel of oil in Canada, on average, and the world price of a barrel of oil is about $110. That’s why we see the price at the pump for gas to fuel our car and autos so high > gasoline prices are set based on the underlying cost of the commodity, in this case its a barrel of oil. But if our cost is only $40 a barrel, why then are Canadians paying gasoline at the equivalent of $110 a barrel? Yes, this is ridiculous.
It’s been a few years since I wrote about this last, and thought we were long overdue for this debate. Well, it’s really not much of a debate any longer, thanks to facts coming to surface this time around.
The issue here is the lack of initiative of our federal government to step in and come up with some form of "fair" pricing policy to Canadians. And they don’t have to think or look very far and hard to come up with what policy is used in most other countries around the globe, countries like Canada that are net exporters of oil. Some countries like Venezuela and Columbia produce oil at a lesser rate than Canada, and the governments in these respective countries have a national pricing policy that brings the average price per litre of car gasoline to about 25 cents!
More likely, the norm for pricing around the globe is as follows: domestic users (that is, residents of the home country) pay a domestic market price, which is somewhere around cost plus 20% profit margins. Pretty fair. That would put Canada at $40 per barrel cost plus 20% gives us about $48, call it $50 a barrel. That’s still 60% less than the global price of a barrel of oil at $110! If we enacted this pricing policy, we would be paying about 60 cents a liter at the pump to fill our car and auto vehicles. 60 cents!!! And what we don’t use is sold to the world at global prices, currently at $1.40 a liter or $110 per barrel of oil.
Wake up Canada! This is our country, our natural resource, our commodity.
Written by: Saverio Manzo
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