• High Gas Prices in Ontario

Everyone should be Concerned about High Gas Prices in Ontario

An uncomfortable fact about higher gas prices is that they have a ripple effect throughout the economy, which ultimately affects the cost of clothing, food, furniture, appliances and automobiles, Susan Gubasta writes.

Avatar By: Susan Gubasta June 5, 2018
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On May 16, the average price of regular gasoline in Toronto was $1.375 per litre, with 40.5 cents — or 30 per cent — of that going to taxes.

That is worrisome news for motorists because it adds an element of uncertainty to their car buying decisions. If gas prices remain high for a year or longer, it could cost motorists thousands of additional dollars for gasoline.

According to Nanos Research, 83 per cent of Ontario families say the family car is essential to run their household. With the price of gasoline approaching an all-time high with no immediate relief in sight, governments should reduce taxes on gasoline to make vehicle ownership and running a business more affordable.

An uncomfortable fact about higher gas prices is that they have a ripple effect throughout the economy, which ultimately affects the cost of clothing, food, furniture, appliances and automobiles.

For example, when you buy a new appliance for your home, the price you pay is partly determined by how much it costs to ship it to the store. When gas prices rise, that appliance will cost more to transport, and consumers end up paying for that increase.

Consumers are frustrated by the apparent randomness of the increases that occur at the pumps. Studies have shown that big oil companies do not engage in collusion to raise prices, but the timing of price increases leaves consumers scratching their heads.

One glaring example of the apparent randomness of gas prices has occurred in Simcoe County for the past two months. At one station, gas is $1.36+/litre during the daytime, and after 10 p.m., it drops to $1.23/litre.

Next morning, less than eight hours later, prices jump back up to $1.36+/litre! What is the possible justification for such roller coaster pricing at the pumps?

Oil and gas companies argue that gas prices are based on competition and on supply and demand. Industry analysts say that the issue is partly the result of the lower Canadian dollar and because many Canadian oil and gas refineries have extended their spring maintenance shutdowns, putting upward pressure on gas prices.

I’ve heard differing views about the price of gas in Canada: at least we don’t pay as much as Europeans, today’s vehicles are more fuel-efficient and gas prices go up and down all the time, and they’ll do so again.

Ontarians do not care how much people in other countries pay for gas; it is what Ontarians have to pay that is of greatest concern.

Representing more than 1,000 new car dealers in Ontario, the Trillium Automobile Dealers Association is applauding Ontario PC Leader Doug Ford’s announcement to reduce gasoline taxes by 10 cents per litre.

Tax relief for such an important commodity such as gasoline should be top of mind for all governments. Sadly, governments have continued to put tax after tax on gasoline.

Those who purchase gasoline in Ontario pay an astonishing five separate taxes on gasoline, which include:

  • 14.7 cents per litre for the Ontario gasoline tax
  • 4.3 cents per litre Cap and Trade tax
  • 10 cents per litre for federal gasoline tax
  • 8 per cent provincial portion of the HST
  • 5 per cent federal portion of the HST.

For anyone considering a car purchase or lease, my advice is not to look at today’s gas prices. Fuel economy is an important consideration, but if you need, say, a pickup, do not avoid buying one just because gas is $1.30+/litre. Review gas prices over the past four years and where they are likely to be in six months and beyond.

There are many viable, gas-powered alternatives on the market. Gas-electric hybrids, plug-in hybrids, electric vehicles and biodiesel are growing more popular in all categories and are well worth your consideration.

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This column represents the views and values of the TADA. Write to [email protected] or go to tada.ca. Susan Gubasta is president of the Trillium Automobile Dealers Association and president/CEO of Mississauga Toyota.

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