People seem compelled to believe certain things, regardless of the evidence to the contrary. For example, people insist that hospital emergency rooms fill up when there’s a full moon, even though research shows no such thing. Some people believe that the moon landing was faked. Others are convinced that gasoline prices are the product of a vast conspiracy, despite the fact that repeated investigations have found nothing of the kind.
The latest uproar takes its cue from the fact that gas prices at the pumps are on average higher than they have been since the Persian Gulf crisis in 1991. How much higher? About four-tenths of a cent. Try this little exercise: Think of any other commodity — one that you use daily and in large quantities — whose price you are aware of changing by a few tenths of a cent. Try to think of one where you even noticed a change of several cents.
Thanks to carefully controlled cartels involving such common household items as milk, cheese and eggs, you pay several times what it actually costs to produce those commodities — but no one boycotts the grocery store because the price of cheese went up by 200 per cent. Very few people can track the cent-by-cent changes in the price of bread and then correlate that with the world price for a bushel of spring wheat and conclude that they are being gouged, even though the Canadian Wheat Board has a monopoly that oil companies would never be capable of constructing in their wildest dreams.
So gas prices are as high as they were before war broke out in the Persian Gulf. And where is the price of crude oil at the moment? It’s north of $30 (U.S.) a barrel, which just happens to be right about where it was before war broke out in the Persian Gulf. That won’t satisfy the conspiracy theorists, however — who now include in their number the Premier of Ontario. A gaggle of Ontario MPs has been traversing the province holding hearings to get to the bottom of this crime against the driving public.
It would be a lot easier — not to mention cheaper — if these MPs just sat in a boardroom somewhere and looked at the stacks of paper that have been prepared on this issue over the years: six investigations by the Competition Bureau and its predecessor agency, and a series of inquiries by other provinces. Not a single one has found any evidence of conspiracy, including the most recent one, which released its report just two weeks ago.
In fact, several have said that by any conventional measure, gas retailing is among the most competitive businesses going. The key issue is not whether prices go up, or even whether they all go up at the same time — it’s whether they stay up. And they invariably don’t. But maybe a stable price would be preferable to all that up-and-down activity. Maybe the federal government could rebuild its stake in Petro-Canada and then help control the gas retailing industry that way — or even create a kind of Canada Gasoline Board that would set quotas and prices. Wouldn’t that be great?
Ask someone fuming at the pumps why they believe in a conspiracy and they will tell you several things: pump prices always go up faster and farther than they come down; they always go up on weekends and holidays; and they are higher than they have ever been. The first two of these things are often true — prices do tend to go up faster than they come down. All that shows is the desperation of oil companies, whose profit margins at the retail end of the chain are measured in pennies per barrel. So does the tendency to push prices up on summer holiday weekends, when you know people will be driving.
No one believes this, of course. How could they, when prices are so high? Most people can tell you how much they paid for gas 10 years ago or even 20 or 30 years ago, or how much their cousin in the United States pays for it. But can they tell you how much of that price is tax, or how much that tax component has risen in the past 10 or 20 or 30 years? Not likely. Could they tell you that — adjusted for the effect of inflation — gas prices are lower than they were 40 years ago, even after you include higher taxes? Probably not.
One more piece of ammo in the gas price conspiracy is the fact that gas stations all put their prices up at the same time. How obvious could it get? Cigarette-smoking figures in dimly lit boardrooms are clearly making a call on the secret phone (shaped like a gas pump), and telling everyone what the price is. Or, they could just be watching each other. “It is not against the law to watch what your competitors are doing and then match their price movements,” says deputy Competition Bureau commissioner Harold Chandler.
Oh sure — as if that’s going to explain it away. No one expects the government to find evidence of price fixing, do they? They’re probably all in on it too. And here’s another thing to think about next time you’re at the pumps: How come the price of gas always goes up when there’s a full moon?