In the News April 12

Extent of Integration of Canadian Energy Sector Within U.S. Economy

Gas Prices Surge Across the Country

Whose economy? Our economy!
Who controls? The people must gain control!

The rise in gas prices throughout Canada and the U.S. is hitting working people, the broad economy and certain businesses very hard. Commuters who have no option but to drive to go to work, to shop or for recreation are trapped by the prices. Businesses that rely on vehicles to make deliveries, many gig workers, transit systems and taxis are suffering or are forced to raise their prices if they can. Taxi fares are usually controlled at the city or provincial level and cannot automatically rise to accommodate the higher gas price.

Where is all this money going that is shelled out in higher gas prices? The price of production of crude oil and refining it into gasoline cannot possibly change in so short a period. The difference between the actual price of production of gas and the market price at the pumps has rapidly widened so where is the difference going? The obvious place is into the pockets of the private owners of oil production, the refineries and gas stations. They are taking advantage in Canada of prices set globally through imperialist institutions such as commodity exchanges that the supranational oligarchs control. The situation is a stark example of Canada’s economy not being in the hands of Canadians and under their control with an aim to serve the people.

In the mass media and universities, apologists for high gas prices are bending over backwards to suggest nothing can be done except perhaps remove gas and carbon taxes. Even that move, which would be positive as all consumer taxes are regressive and anti-people, does not guarantee prices would stay lower as market prices would gradually move back upward to what is called a “competitive” level with marketers pocketing the erstwhile consumer taxes.

An example of apologetics to block the people grasping what is going on and what has to be done to change the situation in their favor is found in a March 8 CBC item entitled, “Why are B.C. gas prices surging when the province gets most of its gas from local refineries?” The sub-title reads, “Gasoline is made from crude oil, the sky-high cost of which is set at a global level.”

This raises the question as to why oil prices are set at a global level and by whom. The answer is not complicated. The entire energy sector is controlled by supranational private interests whose aim is maximum profit. Those narrow private interests are not concerned with the well-being of the people or the economy anywhere in the world. Their reference point is maximum profit for themselves any way it can be materialized.

The CBC item then says, “Economists, fuel experts and politicians have agreed prices are rising” because of unfolding events in Ukraine. So the market price is set by global private interests and those people are using the situation of U.S./NATO expansion and the provoking of Russia into defending itself as an excuse to rapidly raise prices.

The item, while attempting to excuse the use of events in Ukraine to raise prices of gasoline in BC, in fact introduces more questions than answers. It reads, “But BC gets most of its gasoline from Burnaby, Edmonton and Washington state — so why does supply from Russia matter?” Those west coast refineries purchase almost all their crude oil from Alberta through the Trans Mountain pipeline with some Alaskan crude going into Washington. The oil is not from Russia. This leads back to the issue that these energy cartels, which control everything from production to gas stations, are simply using global prices mostly dictated by them in New York and London as an excuse to raise local prices so they can make a killing.

A little scratching of the surface finds these same oil and (natural) gas cartels are also pushing U.S./NATO expansion into eastern Europe and the current war hysteria and hate against Russia to “open up” markets in Europe and replace Russian oil and gas with generally more expensive product from the U.S. and Canada, which those same cartels own and control.

The issue ultimately comes back to who controls the economy and with what aim. This is the issue people must address and take up for solution by taking control out of the hands of the supranational oligarchy and putting it firmly in the hands of the working people with a modern aim for the economy to serve the people, humanize the social and natural environment and live cooperatively with others for mutual benefit with Canada a zone for peace.

Excerpts from CBC item “Why Are BC Gas Prices Surging When the Province Gets Most of its Gas from Local Refineries?

This item is a straightforward apology for the rise in gas prices with a banal explanation and dismissive conclusion that nothing can be done because the global oligarchs control the economy. The following excerpts are reproduced without comment. For the entire article click here.

First off, why is gas so expensive?

Gasoline is made from crude oil, the cost of which is determined globally. The cost is influenced by international supply and demand or geopolitical events.

The price per barrel of crude oil soared this week to levels not seen since 2014, hitting $130 US per barrel Monday before dropping closer to $120.

Most of the gasoline in BC comes from refineries in Burnaby, Edmonton and Washington state, but the selling price of the oil going into those refineries is still decided by the global market.

“We have one price of world oil, and that basically is the price we cannot escape from. So no matter how much we wish the prices are local, they’re not,” said Werner Antweiler, a professor at UBC’s Sauder School of Economics.

Oil producers sell their products to refineries competitively, so if prices are up internationally, they’ll be up locally.

Marc Lee, senior economist with the Canadian Centre for Policy Alternatives, said the cost is being passed onto the consumer.

“Companies are making massive, massive profits,” he told CBC last week.

Why not remove carbon taxes?

There are four main costs that make up the price of regular gasoline:

– The price of crude oil.

– Refining costs.

– Distribution and marketing costs.

– Taxes, including federal, provincial and municipal taxes.

The cost of crude oil is the highest of those four costs, usually determining roughly half of the retail price of gasoline.

Removing taxes would lower the price of gas, but would do nothing to address the crude oil problem.

“The problem is we have a situation in the global market and no amount of changes to taxes will make that go away.”

Still, Alberta on Monday reduced its taxes by 13 cents per litre on both gasoline and diesel to relieve pressure at the pump. BC’s minister of public safety said the coastal province has no plans to follow that lead.

“The reality is the gas price situation is driven by events outside of provincial control,” Minister Mike Farnworth said Monday, adding there is concern fuel companies could raise their prices to profit off the difference if taxes were removed.

“One of the challenges on that taxation side … there’s no guarantee that the price stays down, that the fuel companies don’t just jack the price up to take advantage of the margin that you may have created.”

Is there any hope for relief?

Antweiler said there is a chance for a break at the pumps if Saudi Arabia, the United Arab Emirates or the United States start churning out more supply — but that could take a few months.

Another option for supply could come from Iran if nuclear sanctions are changed. If that happens, Iran could send more oil into the global market.

Talks to unleash Iran from international sanctions are in advanced stages, but again, supply might not come online soon enough to replace Russian output.

(With files from The Associated Press, Reuters and CBC)

Workers’ Forum, posted April 12, 2022.