I have just about given up on hearing any honest dialogue about oil and gasoline prices from politicians. They regularly play politics on energy issues with little regard for facts.
The Republicans blame the Democrats for high gasoline prices. They insist that surging prices are a result of President Biden’s policies. I have addressed these claims previously (here, for example).
Democrats, for their part, regularly cast blame upon the oil companies. In the past week, two prominent Democratic House members did just that. First Representative Katie Porter highlighted Shell’s profits, and promised to crack down on price gouging.
Then, Representative Adam Schiff tweeted:
I don’t believe Rep. Porter and Rep. Schiff are ignorant. They may not understand the intricacies of oil and gas pricing. They may not know that this is well beyond the control of oil and gas companies. Or, that surging prices — which oil companies do not control — will indeed lead to surging profits. But they are mixing up cause and effect.
I bet if you asked them “Why are oil and gas prices rising?”, they would at least understand enough not to answer “Because Big Oil is making them rise.”
But, I think both of them are just playing politics. They understand that demonizing oil and gas companies shifts blame, and it is popular with the public to hate the oil companies. The result is that the public thinks of oil companies with the same kind of contempt with which they hold cigarette companies — despite the fact that these companies provide a critical service for most people.
The problem with this kind of thinking is that it leads to bad energy policies. Instead of passing policies that actually address supply and demand, we end up passing punitive policies that are counter-productive.
Regarding Representative Schiff’s tweet, there are multiple reasons that gasoline prices wouldn’t rapidly respond to an underlying change in the price of oil. One is simply that oil doesn’t instantly get converted into gasoline and arrive at the store for sale.
But there’s something else going on here, in case he is interested in digging a bit deeper. As of February, the U.S. was still importing half a million barrels per day of diesel and gasoline from Russia. That has stopped, and this has caused some market disruptions.
U.S. refineries are struggling to keep up with demand. Distillate levels are very low and jet fuel demand has come roaring back. So, refiners are making as much distillate and jet fuel as they can. However, that shifts the product spectrum somewhat from gasoline production, at a time that we are already missing those Russian imports.
Most of the time oil and gasoline prices are tightly correlated, with a slight time lag. Sometimes, however, there can be issues at the refining stage that can cause oil and gasoline to move in opposite directions.
Imagine a situation where U.S. refining capacity is constrained, but gasoline demand is high. In that case, there may be less demand for oil, because it simply can’t be pushed through the refineries. So you could see crude oil stocks start to rise, and prices soften, while at the same time gasoline prices remain high. This is very similar to the situation we have now.
Most of our imports from Russia were finished products. Now that those have been banned, the market is scrambling to adjust to the loss of those products. It is true that this is a slightly more complex answer than “The oil companies are ripping us off”, but it’s an accurate reflection of what is actually happening.
OTTAWA – Prime Minister Justin Trudeau says the NDP is caving to political pressure from Conservative Leader Pierre Poilievre when it comes to their stance on the consumer carbon price.
Trudeau says he believes Jagmeet Singh and the NDP care about the environment, but it’s “increasingly obvious” that they have “no idea” what to do about climate change.
On Thursday, Singh said the NDP is working on a plan that wouldn’t put the burden of fighting climate change on the backs of workers, but wouldn’t say if that plan would include a consumer carbon price.
Singh’s noncommittal position comes as the NDP tries to frame itself as a credible alternative to the Conservatives in the next federal election.
Poilievre responded to that by releasing a video, pointing out that the NDP has voted time and again in favour of the Liberals’ carbon price.
British Columbia Premier David Eby also changed his tune on Thursday, promising that a re-elected NDP government would scrap the long-standing carbon tax and shift the burden to “big polluters,” if the federal government dropped its requirements.
This report by The Canadian Press was first published Sept. 13, 2024.
Simon Jolin-Barrette, minister responsible for consumer protection, has tabled a bill to force merchants to calculate tips based on the price before tax.
That means on a restaurant bill of $100, suggested tips would be calculated based on $100, not on $114.98 after provincial and federal sales taxes are added.
The bill would also increase the rebate offered to consumers when the price of an item at the cash register is higher than the shelf price, to $15 from $10.
And it would force grocery stores offering a discounted price for several items to clearly list the unit price as well.
Businesses would also have to indicate whether taxes will be added to the price of food products.
This report by The Canadian Press was first published Sept. 12, 2024.
Quebec legislature member Youri Chassin has announced he’s leaving the Coalition Avenir Québec government to sit as an Independent.
He announced the decision shortly after writing an open letter criticizing Premier François Legault’s government for abandoning its principles of smaller government.
In the letter published in Le Journal de Montréal and Le Journal de Québec, Chassin accused the party of falling back on what he called the old formula of throwing money at problems instead of looking to do things differently.
Chassin says public services are more fragile than ever, despite rising spending that pushed the province to a record $11-billion deficit projected in the last budget.
He is the second CAQ member to leave the party in a little more than one week, after economy and energy minister Pierre Fitzgibbon announced Sept. 4 he would leave because he lost motivation to do his job.
Chassin says he has no intention of joining another party and will instead sit as an Independent until the end of his term.
He has represented the Saint-Jérôme riding since the CAQ rose to power in 2018, but has not served in cabinet.
This report by The Canadian Press was first published Sept. 12, 2024.
