Yes, yes, I know – complaining about gasoline prices is like mewling about cold weather or the onset of old age. No one likes a complainer.
In this case I believe there is justification in at least revisiting a local inequity that just doesn’t want to go away. In my earlier post I attempted to understand why there should be such a vast difference between the per litre price for gas in Dawson as opposed to Whitehorse. Local lore will always smirkingly reply; “Oh well, that’s the way it is here, we’re always more expensive than Whitehorse!” Why sustain this defeatist and perverse pride of acceptance when we have the ability to make a change?
I’m bringing this issue up again because market observers have said recently that the price of gasoline has stabilized and will follow a flat-line trend well into September. Furthermore, the average price at the pumps in Whitehorse hovers around $1.04 per litre.
I’m assuming that the fuel wholesaler North60 supplies some of the Whitehorse outlets as it does the only gas station within the Dawson town-site which it also happens to own. Yet the per litre price at their gas station here seems to have frozen at around $1.30 per litre regardless of market fluctuations in the real world.
I raise the question, why is this? Is it a business strategy, is it because older more expensive inventory hasn’t been sold or is it to cover off unusually high overhead?
Can we speculate that perhaps we are witnessing a case of opportunistic exploitation of a fortuitous market condition? During music fest weekend I noticed the lineups at the pumps as they filled up for the drive home. I felt sorry for them knowing that there’s a cheaper alternative only a few klicks down the highway.
Consumers have the right to ask retailers about their pricing policies. For them to say “If you don’t like it go elsewhere.” is an unacceptable answer to those of us who raise questions and are trying to improve the cost of living here.
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.
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