They’re gouging us at the pumps again

Dear Editor,

First, let me explain how supply and demand works: If supply is up and demand doesn’t change, the price drops. If supply is down and demand doesn’t change, the price increases. Similarly, if demand is down and supply is unchanged, the price drops, and if demand is up and supply is unchanged the price increases.

An oil refinery is a “demander” of oil but a “supplier” of gasoline.

So, when the refineries in Houston, Texas were shut down due to flooding, the demand for oil dropped. Yet, the price didn’t drop. In fact, the price is still rising. The price of gasoline went up as it should have. Alas, but not here in Alberta.

Other than the price of oil, we should have been unaffected by the gasoline prices in the US. However, our gas stations which are mostly owned by the company that is on their signs (mainly big oil), use every excuse they can to raise the price of gasoline, real, imagined, and even contradictory.

But now gas prices are dropping in the US so if that was the reason our price went up, why isn’t it dropping? Answer: a good excuse to gouge the consumer again.

As you know, our gas reflects about $110/bbl oil. Oil is only at $48.62/bbl. Yes, taxes take up a portion of the cost of a litre of gasoline, but the price never dropped when the price of oil dropped. Mostly we are being gouged.

And, it doesn’t end there. Here in Alberta, we don’t get world prices for our oil. Because we don’t have enough pipelines to ship our oil to market, we have an oversupply. We are currently getting something like $.80 to $.90 on the $1. That is why the Americans are fighting against our pipelines. (They are making huge profits at our cost). Yet, we are paying world prices for our gasoline.

So, here is what is happening. The big oil companies sell our oil to their refineries at less than world prices. Our governments collect taxes and, more importantly, royalties on that price. Then their refineries charge world prices plus huge markups on the wholesale price of gasoline they sell to their gas stations. Then the company-owned gas stations charge greatly marked-up prices for their retail gasoline.

We, as consumers and taxpayers, are getting ripped off on all three levels. Yet, most Albertans blame our current government instead of the oil companies and the previous PC government that allowed, and encouraged, this situation to be.

So, now you know. When a person who is honestly mistaken learns the truth, he or she either stops being mistaken, or stops being honest!

Eugene Eklund

Whitecourt, AB