Jordan Bateman: let's do the math on gas prices - The Orca
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Jordan Bateman: let’s do the math on gas prices

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Gas prices are all the rage right now - what's really driving them up, and what can we actually do about it?

The BC Liberal Party is using high gas prices to inflict deep damage on John Horgan’s whole Make B.C. Affordable Again brand. They can dig the knife even deeper by offering some solutions.

When it comes to conversation topics, it’s tough to bump any of real estate prices, the weather and hockey out of the top 3 things British Columbians like to talk about. But skyrocketing gasoline prices have many people’s chins wagging and wallets trembling.

Doing what successful oppositions do – oppose – the BC Liberals have relentlessly blasted away at the Horgan government in Question Period, on billboards, on radio ads, and in media clips.

Meanwhile, Horgan and the NDP have turned themselves into knots trying to get away from the criticism. As Global TV’s Keith Baldrey tweeted when Horgan punted the issue to the BC Utilities Commission last week: “This is the 8th card the premier has played in the gas price game: 1. Maybe tax relief. 2. No, definitely no tax relief. 3. Maybe regulations. 4. No, no regulations. 5. Need a new refinery. 6. No, only a refinery in Alta. 7. Ask PM to change what flows through pipeline.”

The reason the BC Liberals keep swinging on this is because their punched keep landing.

With the sole exception of the PST, there is no tax that British Columbians pay more often than at a gas pump. Every time they fill up a vehicle, they feel the pain of high gas prices. And the BC Liberals make sure the NDP feel a sliver of that pain too.

The high prices have renewed the “Blaine Drain” – the steady flow of Canadian drivers going south to get cheaper gas across the border. A 2018 study by Western Washington University shows 18% of crossborder drivers cite “gas” as the number one reason they go south (23% say shopping – and you can bet they’re buying gasoline too). And this was before the latest price and tax hikes.

Here’s the kicker, and the fact that trips up politicians like John Horgan when they try and blame gas companies for all their problems. If you took out taxes, gasoline prices in Blaine would not differ much from the Lower Mainland. Stick with me through this math:

  • As I write this, you can buy a gallon of gas in Blaine for $3.69 USD – that’s $4.97 CAD.
  • Of that cost, 67.8 cents USD/91.4 cents per gallon CAD is federal and state tax.
  • Convert that gallon into litres and a wholesale litre of Blaine gas (before taxes) is 107.2 CAD. Taxes included, it’s 131.3 CAD.

In Surrey, it looks like this:

  • Gas is 164.9 CAD per litre (taxes included).
  • 54.2 cents of that is various federal, provincial and TransLink taxes
  • A wholesale litre of gas here (before taxes) is 110.7 CAD.

So the wholesale, Canadian price for a litre of gas in Blaine is 107.2 cents/L. The price in Surrey for that same litre is 110.7 cents/L – a total difference of 3.5 cents. No one would head south to save $1.75 on a 50-litre fill-up.

But the taxes make all the difference. Because of the disparity of the US/Canadian tax regimes, drivers now save almost $17 on a fill-up. So at least $15 of that difference in price has nothing to do with gasoline companies and everything to do with money-hungry Canadian and BC politicians overtaxing drivers.

So what should the BC Liberals do?

What can they put into their platform to highlight the difference between them and John Horgan? I’d suggest three things: pressuring the federal government, suspending the carbon tax, and building oil and gas infrastructure (i.e. pipelines).

The first suggestion is so obvious I can’t believe no provincial party has seized on it as both an issue and a list-builder. Right now, the last tax to be levied on gasoline is the GST, and it’s charged on the entire litre, including on the taxes embedded in it. That’s right: it’s a tax-on-tax, which is so fundamentally stupid and offensive that it should be illegal.

The BC Liberals should use their platform to call on the Trudeau Government – and other Canadian political parties – to scrap the tax-on-tax. I could see thousands of British Columbians signing petitions to send the feds this message. Just cutting the GST charged on other taxes would save drivers nearly 2.5 cents per litre.

The second suggestion depends on what happens this fall in the federal election. If the Scheer Conservatives win a majority this October, it’s clear they will kill Trudeau’s national carbon tax scheme. At that point, B.C. will again be the only province with our type of carbon tax.

Gordon Campbell, the author of the tax, always said it was important to position B.C. as a climate leader. But a leader implies that someone, somewhere, is following. And no one would be. Canada would be out of the carbon tax business. Washington State has already voted it down three times.

There’s no point beating a dead horse – suspend the tax, at least until such time as our main competitors bring their own version in. (This idea deserves deeper debate, something I’ll write about down the road.)

Finally, strongly support the TransMountain pipeline and welcome other oil and gas investment into B.C. Make the approval process faster and fairer to everyone – and link it to making life more affordable.

Get more of these products into B.C. As my friend Blair King wrote recently about gas prices, “This problem can only be addressed by either reducing our demand or increasing our supply. I have argued repeatedly that the way to address this problem is to build the TransMountain Expansion Project and reduce the bottleneck in our refined fuel supply chain.” (Go read his whole piece – it’s worth it.)

I’ll throw in an even bolder, bonus policy suggestion: begin to wean TransLink (and BC Transit in Greater Victoria) off gas taxes all together. It has always been a perverse incentive structure: TransLink actually gets more money when more people drive. With gas prices currently through the roof, TransLink isn’t going to collect as much as revenue as they hoped, anyway.

As gas prices continue to climb, the BC Liberals will be able to smack the NDP around with this issue for months to come, and it will shake support loose from John Horgan. The key is to cement those voters to the BC Liberals over the long term by ensuring that Andrew Wilkinson can articulate a plan that they believe will help.

It’s time to get Canada’s big gas moving, and to cut B.C.’s big gas taxes. Now that would bring in some big gas savings.

 

Jordan Bateman has a long history of public policy work, championing small business and fiscal responsibility. Currently the Vice President, Communications & Marketing for the Independent Contractors and Business Association (ICBA), Jordan also served six years as the B.C. Director of the Canadian Taxpayers Federation, and was a two-term Langley Township Councillor.

SWIM ON