Biz Blogs

Richard Rosenthal

Gas Prices: Are Canadians being ripped off and if so, why?

Posted April 6, 2011 @ 5:49AM

In trying to find out why gas prices in Canada are higher than the US I did a bit of googling and am even more confused now than before.

According to the information on the internet Canada exports more oil than it imports and most of this goes to the US. The US is a net importer of oil. See http://www.theoildrum.com/node/5666

Gasoline prices in Canada are significantly higher than other oil producing countries particularly the Middle East and South America. See http://en.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_pricing#Typical_gasoline_prices_around_the_world

We are told that under NAFTA we cannot charge the US more than we charge ourselves for oil and yet Mexico is part of NAFTA and gasoline prices there are significantly lower than in Canada and the US from which it imports much of its gasoline. The reason appears to be government subsidies.

The Canadian dollar is stronger than the US dollar so that is not the reason for the difference between Canada and the US either.

Additionally, the cost of producing a barrel of oil has not increased nearly as much as the world oil prices since oil is a commodity. So where is the extra profit on Canada's oil production going?

Not being an economist or a politician, I am unable to figure it out but I have my suspicions. I do know that Canadians have to start demanding answers and lower gasoline prices. It is particularly unfair that the gas we export to the US is being sold at prices about 30% lower than in Canada.

What am I missing here?

Add a comment on this article

Keep it clean, and stay on the subject or we might delete your comment. If you see inappropriate language, e-mail us.

Display Name:

Comment: