Soaring gas prices could be election issue

Canadian Press via Sun Media ^ | Bruce Cheadle

[Clive]

OTTAWA (CP) - An irate senior in central Ontario drives away from the gas pump after paying only $20 - "the fair price" - for a $25 fill-up. He leaves his name and phone number, defying police to charge him.

The Canadian Automobile Association in Quebec gets more than 33,000 signatures on an online protest letter called Pumped Up About Gas Prices.

The government of Nova Scotia introduces legislation that would force oil companies to give drivers two days notice before hiking gasoline prices.

On B.C.'s Salt Spring Island, pump prices hit $1.01 a litre and a UBC professor predicts soaring fuel costs will soon translate into higher airfares.

There's an anger in the land, and with a June 28 federal election call looming in an issue-deficient season, gasoline could be the accelerant for a hot campaign.

The issue appeared to flare from nowhere in the final week of the Commons session as Conservative MPs repeatedly hammered the Liberal government over gas tax policy.

The Tories want Ottawa to stop charging GST on top of the federal gas excise tax, arguing that every one-cent increase in gasoline retail prices inflates federal tax revenue by $32 million annually.

"The least they can do is leave some of that money with Canadians, especially leading up to this busy (vacation) season," Conservative MP Rahim Jaffer said Friday in the Commons.

Finance Minister Ralph Goodale, a stolid performer from oil-and-gas country in Saskatchewan, rose for the umpteenth time to rebuff the charge.

"To make the simplistic change the honourable gentleman is proposing makes a difference of about one cent per litre, and that's hardly going to make an appreciable benefit to consumers," said Goodale.

"The search for a solution has to be a little more sophisticated than a glib opposition one-liner."

But with experts already predicting that the latest federal Competition Bureau investigation into soaring gas prices will come to naught, Goodale must know that glib one-liners serve as well as impotent inquiries.

The Canadian Taxpayers' Federation estimates that, on average, 42 per cent of the price of a litre of fuel is taxes, providing Ottawa with more than $5 billion a year.

Liberals counter that those revenues pay for a lot of essential services.

Environmentalists and public policy analysts, meanwhile, argue that artificially reducing gas prices would encourage wasteful driving and is simply bad public policy.

It's a no-win debate.

And woe to the Liberals if this gasoline protest really catches fire, said Don Desserud, a political scientist at the University of New Brunswick in Saint John.

Desserud had a front-row seat last summer when Bernard Lord's Conservative government came within a one-seat whisker of losing office in a New Brunswick election that turned on public fury over high automobile insurance rates.

In fact auto insurance was an issue in elections in all four Atlantic provinces last year.

The insurance spike appeared to catch all political parties unprepared, and Lord's initial reaction was to tell the public that premiers really have no authority over such matters.

"This backfired terribly against the premier," Desserud said in an interview. "The public was saying, 'What the heck's the good of having you guys there if you can't do anything about this?' "

Goodale's dismissal of a one-cent cut in the GST may be seen as similarly anemic.

"It is the worst thing you can say," said Desserud.

Longtime political observers will remember the election of 1980, when Joe Clark's highly unpopular 18-cent-per-gallon gasoline tax helped sink his minority government.

The Liberals of Pierre Trudeau said they would also raise taxes - but by not as much. After winning a majority, the Liberals dwarfed the 18-cent hike with a rash of other fuel taxes and were subsequently turfed from office in 1984.

Bottom-dollar consumer issues have a way of galvanizing voters, said Desserud, and incumbent governments forget it at their peril.

"They have to realize that policy issues like this can take over. You think you're running a campaign on the questions of leadership, honesty, integrity - the usual banalities - and the public says, 'No, here's the issue that's bugging us."'

[ovrtaxt]

I wonder when Canada will figure out that they can drill for their own oil.

[alloysteel]

Gasoline prices are not something that responds easily to political pressure. The fluctuation of petroleum prices is one of the more pure examples of the laws of supply and demand. If demand exceeds supply, prices rise. If supply exceeds demand, prices fall. Supply may be manipulated much more easily (and quickly) than demand. There is no incentive to lower prices when supply is short. There is strong incentive to open up more sources while the price is high.

High prices are a POWERFUL incentive to demand fuel economy in road vehicles, and greater efficiency in every application of energy generation. But for the short term, if prices fall too quickly, the incentive does not last long enough to have long-term impact. Sure, there are small vehicles that, as a one-trick pony, may get highly impressive fuel mileage. Smaller power unit, less weight, equals greater fuel economy. But every compromise made to gain this greater fuel economy also adds to the list of undesirable characteristics of the vehicle.

[backhoe]

-Sticker Shock-$3 a gallon gas? Some links--

[Clive]

CAnada does drill for its own oil, and scoop the Tar Sands for it.

Most of what it produces is exported to the US.

The alberta tar sands holds five times the oil reserves of Saudie Arabia. Every increase in oil price makes Tar Sands oil production economically more feasible.

Oil production is a touchy subject in Alberta which has not forgotten that Pierre Trudeau's National Energy Policy amounted to confiscation of the proceeds of Alberta oil production and exports while leaving Quebec electricity production and exports alone.

I expect soon to see a revival of the old bumper sticker seen in Alberta during the big energy crisis when the Arabs started using oil as a weapon. It said "Let the Eastern bastards freeze in the dark"

BTW and OT, A bumper sticker that I liked was "RED NECK - AND PROUD OF IT"

[Lokibob]

Gasoline Taxes by State 2002
(Source: American Petroleum Institute)

State	State Excise	Other State Taxes	Total State Taxes	Total Federal & State Taxes
Alabama	16	5	21	39.4
Alaska	8		8	26.4
Arizona	18	1	19	37.4
Arkansas	21.5	0.2	21.7	40.1
California	18	14	32	50.4
Colorado	22		22	40.4
Connecticut	25	4.7	29.7	48.1
Delaware	23		23	41.4
Dist. of Columbia	20		20	38.4
Florida	13.6	16	29.6	48
Georgia	7.5	4.7	12.2	30.6
Hawaii	16	19.1	35.1	53.5
Idaho	25		25	43.4
Illinois	19	11	30	48.4
Indiana	15	3.1	18.1	36.5
Iowa	20.1	1	21.1	39.5
Kansas	23	1	24	42.4
Kentucky	15	6.4	21.4	39.8
Louisiana	20		20	38.4
Maine	22	1.5	23.5	41.9
Maryland	23.5		23.5	41.9
Massachusetts	21	0.5	21.5	39.9
Michigan	19	7.2	26.2	44.6
Minnesota	20		20	38.4
Mississippi	18	0.8	18.8	37.2
Missouri	17		17	35.4
Montana	27	0.8	27.8	46.2
Nebraska	24.5	0.9	25.4	43.8
Nevada	23	10.3	33.3	51.7
New Hampshire	18	2.6	20.6	39
New Jersey	10.5	4	14.5	32.9
New Mexico	17	1	18	36.4
New York	8	22.3	30.3	48.7
North Carolina	22.1	0.3	22.4	40.8
North Dakota	21		21	39.4
Ohio	22		22	40.4
Oklahoma	16	1	17	35.4
Oregon	24		24	42.4
Pennsylvania	12	14.7	26.7	45.1
Rhode Island	27	4	31	49.4
South Carolina	16	0.8	16.8	35.2
South Dakota	22	2	24	42.4
Tennessee	20	1.4	21.4	39.8
Texas	20		20	38.4
Utah	24.5		24.5	42.9
Vermont	19	1	20	38.4
Virginia	17.5	1.4	18.9	37.3
Washington	23		23	41.4
West Virginia	20.5	4.9	25.4	43.8
Wisconsin	28.1	3	31.1	49.5
Wyoming	13	1	14	32.4
U.S. Average	17.9	5.7	23.6	42

Source: Historical Trends in Motor Gasoline Taxes, 1918-2002
from the American Petroleum Institute

1. State excise taxes represent rates effective as of July 2002.

2. Largely excludes local taxes which are estimated to average approximately 2 cents per gallon nationwide. However, some local county taxes in Alabama, California, Florida, Hawaii, Nevada, New York, and Virginia are included. Includes state sales taxes, gross receipts taxes, and underground storage tank taxes. State sales taxes, expressed in cents per gallon, are based on selected city average retail gasoline prices as of April 1998. See notes to tax tables for individual states.

3. Includes 18.3 cents per gallon federal excise tax and volume-weighted average U.S. total state taxes.

4. Represents the average of state tax rates multiplied by state gasoline consumption records.

Sources:Petroleum Institute summaries of "State Motor Fuel Tax Rates," and reports on "Nationwide and State-by-State Motor Fuel Taxes"

[mewzilla]

I hear sales of light trucks (which includes vehicles like SUVs) are still doing well. Guess gas prices can't be all that high, can they? So much for an election issue.

[mewzilla]

Thanks for that chart! If pols really wanted to give some relief, they'd lower taxes. That would work far faster than anything else.

[Lokibob]

Lets see, 42 cents on $2.00 gallon gas is 20%, roughly.

[SevenDaysInMay]

American voters can prove that they should not be trusted with the vote.

Kerry made some similar statement when he returned from his 4 months of committing war crimes in 1971.

[Lokibob]

Live out west where driving isn't an option, it is a requirement.

24 miles to Wal Mart.(round trip)
80+ miles to the movies. (round trip)

$2.00 gas bites and sucks in Utah.

[pickemuphere]

Lets see, 42 cents on $2.00 gallon gas is 20%, roughly.

But it isn't the tax on gasoline that's increasing -- at least not around here. We've gone up 42 cents in the past three months without the help of any new tax measures.

[CROSSHIGHWAYMAN]

I called the White House 6 months ago to tell them how to capitalize on the soaring gas prices, especially in California.

It's very simple!

The Democrats and certain environmental wackos have impeded Bush's energy program for over 3 years.

If Californians are looking forward to $4 gas in a year, they should vote for Kerry.

If America had begun to tap proven reserves 3 years ago, thousands of new jobs would have been created and the price of fuel might not be so high.

Dozens of new refineries need to be built.

The Saudis have offered to build two!!

But the domestic environmental terrorists somehow have frightened the pansies in Congress.

Supply and demand seem to work well in everything except oil and refined products.

What gives?

[mewzilla]

It's called supply and demand :) But the fastest form of relief can be given by lowering taxes. That wouldn't require new drilling, or refinery building. That relief could come immediately.

[Clive]

"Supply and demand seem to work well in everything except oil and refined products.

What gives?"

Politics is what gives, and enviro-nazis.

If "supply and demand" did not have these countering influences, we would be producing much of our electricity using a mix of high temperature US style reactors and low temperature unenriched uranium CANDU reactors, running them flat out 24/7 which is their most efficient way to produce, and using the surplus electricity in off-hours to produce hydrogen as a fuel.

And the high price of oil would have brought the Alberta tar sands and Alaska north shore into full production.

[Lokibob]

I realize that, but, isn't 20% a very high figure for taxing any commodity? And if the price comes down to $1.50/ gal, it rises to 28% as a tax.

Imagine if milk was taxed at 20%, or your bottled water, or your soda pop.

If the national sales tax were 20%, the world would dive into a depression so fast, it would be unbelievable.

If the government wants to give this country a shot in the arm, cutting the tax on gasoline by 50% would be an immediate boost.

[boxsmith13]

"I wonder when Canada will figure out that they can drill for their own oil."

But they still have to pay the woprld price for even their own oil. Their probelm is taxes anda weak CDN dollar

[Tijeras_Slim]

24 miles to Walmart (round trip)

City Boy! It's a 22 mile round trip just to get my mail. :)

[Sybeck1]

How about a list of the dims and the rinos that voted against drilling in ANWAR?

[Clintons Are White Trash]

How can this be true??? GW is all about the big oil companies, you would think the last thing they would want to do is put him out of office! (/sarcasm)