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Jack Layton, who has campaigned on promises to create a gas-price watchdog, conceded there’s no guarantee that his proposed climate-change policies won’t be passed on to consumers at the pumps – but argued oil companies are trying to scare Canadians about the costs.
Conservative Leader Stephen Harper claimed this week that Mr. Layton’s plan to impose a cap-and-trade system on large carbon emitters would raise the price of gas by 10 cents a litre. Other analysts have opined that it could lead to extra costs of just a few cents a few cents a litre at the pumps.
The last refuge of opportunistic populism – if the dying days of the 2011 election are any hint – is woefully misleading rhetoric on gasoline prices.
Given the high prices Canadians are paying for fuel, the only real surprise is that it took this long for the parties to start using the pinch at the pump as a campaign wedge.
First up was Conservative Leader Stephen Harper, wrongly accusing the NDP of a plot to send gasoline prices soaring through a cap-and-trade system.
As it turns out, the NDP proposal won’t do so, at least not very much – largely because it’s a woefully inadequate response to the challenge of climate change, encompassing only about half the emissions that the Canadian economy spits out each year. Not included is one of the single biggest sources of emissions: those from the tailpipes of drivers, otherwise known as voters.
Mr. Harper may have jumped the gun a bit in slamming the NDP, but he and others could be forgiven for assuming that the NDP would take climate change seriously enough to propose an effective cap-and-trade program. And the NDP plan would increase prices – just not by as much as Mr. Harper claimed.
Less generously, Mr. Harper continues to pretend that his own party has anything approaching a coherent plan for containing greenhouse-gas emissions.
The reality is, having successively demonized carbon taxes and cap and trade, the Conservative approach to reducing emissions will likely devolve to Soviet-style regulation. That is clumsy, and at best, at least as costly as a carbon tax, according to Andrew Leach, economist at the University of Alberta’s school of business.
Of course, there were ample economic misstatements on Thursday, and not just by the Conservatives. Mr. Layton, too, was busy at work, floating the tired idea of another inquiry into the great mystery of high gasoline prices. (Hint: Dig up those notes from the second day of economics class, the ones that have supply and demand curves scrawled on them.)
The NDP Leader has said he would appoint an ombudsman to investigate whether gas retailers are colluding to gouge consumers, and might even regulate gas prices.
Defending Big Oil is a lonely game, but here is the reality. Mr. Layton’s ombudsman will find what every one of the many exhaustive committees, special investigators and probes have discovered. The gasoline industry is intensely competitive, to the point where it’s close to a textbook case of pure market competition.
As for capping prices, the only hitches would be a sudden drop in supply, 1970s-style lineups at the pumps and the possible need to abrogate NAFTA.
The irony is this. If Canadians really want to save on energy costs, they need to look at themselves, not oil companies. Demand pushing too close to available supply is the piston behind price gyrations at the pump.
Cut demand – say, through a carbon tax or comprehensive cap-and-trade program – and you cut prices.