Gouged at the gas pump in Dawson?
Did you know that Yukon has the lowest excise tax on gasoline in Canada? A levy of 6.2 cents per litre is the Territorial component along with the 10 cent federal levy per litre for a total of 16.2 cents. The highest combined provincial/federal excise tax for gasoline is found in PEI at 31.3 cents per litre not including their provincial sales tax. Of course these amounts don’t include GST which is added at the time of purchase along with the other factors that determine the final price at the pump.
As far as the GST component is concerned we can clearly see the triple dipping taking place by our governments. In my mind it is a grievous burden to levy a sales tax on something that already includes a well defined tax structure within the final retail price. But all of this is another bone of contention for future debate.
Given that our Yukon fuel taxes are so low in comparison with the rest of Canada why are prices so high at the pumps outside of Whitehorse, in particular Dawson City? The cliché has always been that it’s the shipping and transportation costs that contribute to sometimes crippling prices for all kinds of commodities here. Is this really true?
Let’s look at a general comparison between Whitehorse and Dawson. First of all Whitehorse pump prices of around 84 cents per litre for unleaded regular are not that far off from the national average. But compare that with today’s price in Dawson; $1.31 per litre regular unleaded. A difference of 47¢ a litre or $1.78 per US gallon. Is that spread really a reflection of the extra overhead attributed to doing business in Dawson or is it exploitive pricing?
Here’s a simple way of calculating the retail cost of fuel. The New York Mercantile Exchange sets the daily wholesale price for gasoline. As of last Friday it worked out to approximately 36¢ per litre in Canadian funds. Now add the markup, in Ontario it’s about 14¢ per litre, let’s be generous and for the sake of argument determine that the margin for Yukon will be more than double, let’s make it 30¢ giving us a new total of 66¢ per litre. Now add the total excise taxes of 16.2 cents for a total of 82.2 cents per litre at the pumps (excluding the 5% gst). Now that’s pretty close to the current Whitehorse prices but wildly out of whack with Dawson.
The tanker trucks that bring fuel to Dawson can each carry 37,500 litres or more . If we multiply that quantity by the 47¢ per litre extra that the gas station in Dawson charges compared to Whitehorse we are looking at $17,625 added to the value of the contents of one tanker truck between Whitehorse and Dawson. Or a B-Train tanker can carry 63,000 litres for an added value of $29,610. How’s that for a windfall profit for a shipping distance of only 300 miles?
As Dawsonites we really need to wrap our heads around this and not take it lying down. I’m sure the suppliers will have every excuse in the book to justify their predatory pricing practices.
There should be jail terms for that sort of gouging. In a small town it’s bloody appalling. Give ‘em hell, John!
I am going to stay on top of this fuel pricing story and it may just change our plans this year. We normally spend 5-7 days in Dawson City, prior to crossing into Alaska. However, if the merchants are changing to a gouge mode, then we will just bypass Dawson City and spend our dollars in a town that appreciates us. I would imagine this will also hurt the bus traffic this year, as a price like that would be a killer for the small margin they operate on.
Straighten up and treat your guest right or your town will die a slow and painful death without the tourist.
With 3 dealers conspiring in this gouge, surely this is the sort of condition that Competition Bureau Canada can deal with ( http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/home )
I too will be watching this, if the situation hasn’t changed by April I will be buying some extra fuel canisters and driving right past Dawson this year.
Murray, although it’s tempting to think there may be price fixing going on between suppliers, there is one in Callison – our industrial subdivision – that sells regular unleaded at 1.21 per litre, ten cents cheaper than the one in town. Most people, especially tourists use our only service station in town.
Just the same, it is still an unacceptable and unjustifiable difference in price.
What galls me is the refusal of local pumps to reflect the fluctuations in the market price for gasoline when world prices drop. When the market goes up this is almost immediately reflected at our pumps but it rarely happens in reverse. This is where there may be collusion.
The folks in Callison have always been cheaper – I always fueled my motorcoach there. Collusion still exists (IMO) when one company just puts their product at 10 cents below whatever the other charges. In Carcross the FN quit their relatively minor fuel gouging a long time ago because most of us just fueled in Whitehorse instead – you folks unfortunately don’t have that power. The other place that has a very bad reputation for that is Watson Lake, but again nothing compared to your situation.
Perhaps the competition bureau should take a look.
It’s been like this the entire 10 years I’ve lived in the Yukon, especially at the Shell station. I learned quickly enough to fuel up at the Dempster corner before coming in to town, but of course that doesn’t make sense for the people already in town.
In July 2008, we paid much less for diesel in Ross River than we did in Dawson City. We had a hard time making sense of that, especially when Ross River had one gas station, and it was the ONLY gas station open along the Campbell Hwy.
Dawson has had pricier fuel than the rest of the north (other than Eagle Plains) for years. It is one of the reasons we tend to not visit Dawson too much anymore. And we won’t be visiting during our 2009 trip either.
I have been as frustrated by high gas prices in Dawson as the next person. It is a MAJOR tax on the local economy.
NYMEX gasoline traded at approx 2.10 US/gallon in summer 06. In Canada Funds, about 2.33.
Friday, NYMEX gasoline closed at 1.10 US/gallon, or about 1.34 in Canada Funds.
Based on this proportion you could reasonably expect your retail price to be about 26 cents lower plus a couple for GST, so 28 cents lower than summer 2006. I just looked it up and gasoline was 1.35 in Callison that summer, so you’d look for 1.07 now. It’s been 1.15-1.21 the last few weeks, so it could be fair to say it’s not falling as fast as it should. However, the NYMEX price is for NY harbour and is just a benchmark and there are a lot of other factors in a western Canadian market so not directly comparable.
Check the YTG stats.
Jan 2007 Whitehorse 96 Dawson 122
Dec 2008 Whitehorse 87 Dawson 125
So for sure this looks like a widening problem.
For a little balance, it should be recognised that there are a lot of costs involved beyond the market price of gasoline or even the extra cost of shipping. There are very large fixed costs involved in running a gas station and these capital investments and maintenance costs are spread over very low volume here especially in the winter so prices will fall slower.
I believe there are actually only 2 fuel suppliers into this town and I bet their costs aren’t too different so your discrepancy is at the retail level. Now, whether they need these large mark-ups to cover increasing costs of maintaining service up here in the winter on low volume, I couldn’t tell you but I do suspect one or two haven’t done too well this Fall.
Ultimately, this bizarre passion that gasoline prices excite, way beyond the price of any other commodity is somewhat irrational. We do live in a free and democratic society and if you believe in that, then you should also believe those rights belong to business too and in the right of a business to sell its product at whatever price it wishes and to live or die by the consumer reaction. When gas is that much cheaper in Callison, honestly why not just go buy it there and let the other guy go out of business rather than complain? That’s your choice to make.
Better still, seeing as I still observe so many people driving and idling when it’s clearly not necessary, try some other methods of getting about that don’t use gasoline, get a fuel-efficient vehicle or plug it in when it’s cold. I can’t believe the addiction some still have to feeding the fuel companies.
3 other things:
1. Why not start a local ‘gas buddy’ section on local website that may promote some shopping around and competition when people are more aware of prices?
2. If I recall, AFL tried to come into our market last summer and even hit the residents with flyers offering lower prices and a bit of competition and service out of Callison. But I think they got chased out by the permitting and YESAA people so the status quo lives on.
3. Why not consider having the community build and run it’s own gas station? I don’t believe there’s a law against it.
In general I think it is just one more example of how increasingly economically unviable Dawson is becoming especially in the winter.
The NYMEX price is the North American benchmark. The only reason for Canadian oil companies to price higher than the benchmark is corporate greed, pure and simple.
The NYMEX price is the North American benchmark but in reality the price to physically deliver gasoline into New Your harbour. Yukon gasoline is not refined anywhere near there so there are many other factors that affect our price on top, very much based on supply and demand in the locale of our own refineries, whether Alaskan or Albertan.
I agree that I would love to hear a valid explanation for this increasing differential that began more than just a few months ago with the fall in prices. However, the only real way to influence such matters in a free enterprise culture is with your purchasing choices or by increasing competition.
Maybe see what you can do to encourage a new competitor to move in. If these gas stations are really making so much money there should be plenty of interest.
Do you suggest regulating gas prices by government? Why just gas? Where else might you go? Bread, milk? If everyone just moved to the cheapest supplier you’d see some action fast.
I do have to say that the outlet in Callison is doing its best to be competitive. Earlier I said their price for regular gas was 1.21, actually it’s 1.15.
Dawson Activist, here’s a curiosity for you. The price of alcohol is regulated by government causing it to be equal everywhere in the Territory, so why shouldn’t fuel and other commodities be subject to the same control?
Actually the price of alcohol by retailers is not regulated by government except for the sale of “Off-sales”. Every licenced establishment may set their own prices based however they like. “Off-sales” are restricted on the markup to supposedly protect the consumer.
Retailers of liquor are no different than retailers of any other product with regards to trying to make a profit and will often have a higher markup on what is popular.
On another note – government also does not regulate the price of alcohol purchased by licenced establishments for resale. They pay the exact same price from the liquor store for their bottle that you do (whatever that bottle may be). Now can you say corporate greed?
Okay Justmyopinion, I stand corrected.
What I meant to point out is that government equalizes the prices in all the Liquor Stores throughout the Territory.
Additionally, wholesale suppliers to the liquor corp are free to charge whatever they wish if you can get them to buy, it is only the liquor store mark-up percentage that is regulated.
Equalisation of prices by effective cross-subsidy may work in a govt monopoly situation like the liquor corp or hydro but you can’t apply the same to a private enterprise. A group of people (shareholders) should be free to invest their money and offer a product for sale to make a profit at whatever price they like. These companies should be free to compete on price and service. This is not a monopoly situation. There’s one gas station for about every 300 people between here and the Dempster Corner. And if there’s a 16 cent difference around the corner I think one would find it very hard to demonstrate price collusion.
Go shop there and make sure all our visitors know about it too I say.
If you want to control gas prices, fine, but you’ll need to take over the local industry first to make it work. Like I said, raise the funds and build a community gas station and we can charge whatever we think is necessary. Alternatively, and easier, attract some competition. If it’s really easy money, they’ll come.
Actually I was just told gas was posted in Callison at 1.05 today.
I don’t know much of websites so maybe you could set something up and get us on gasbuddy.com then we’d all be able to spot prices and hot things up competition-wise a little.
our visitors could see it too.
Yes, kudos to the pumps out at Callison. $1.05 is certainly much more in line with reality than the $1.31 in town. Let’s hope people vote with their dollars and support the business that stays competitive.
Your idea of a local gasbuddy.com is worth pursuing for sure.
it costs 6 cents a litre to truck from whitehorse to here. everyone should demand an explanation from our suppliers as to why they can charge more than that for our gas. take a tape recorder with you because the excusses they offer are just hilarious. we really need to do something!!
One wonders why Dawsonites do not vote with their engines and idle their vehicles less; even during the recent warm spell, many people leave their vehicles idling outside the stores, while the retailers that are accused of gouging rub their hands.
I would be interested in hearing from a gas retailer here.