The Canadian Taxpayers Federation is pointing out that the 1.5¢-per-litre increase introduced by Parliament in 1995 to target the fiscal deficit is still in place a decade after the budget was balanced and has raised $6-billion for the federal government. Well, blame the government. Jack Layton, the leader of the NDP blames "big oil" for gouging Canadians and has called for the classic Canadian solution to intractable problems, a public inquiry.

 

Some aren’t “going there”: the governing Conservatives say they have done their bit by cutting the GST by two points. Stephane Dion, the Opposition Leader is about to propose a carbon tax that will increase the cost of all sources of energy, —but be "revenue-neutral" and not raise the price of gasoline.

 

Another response, likely to be heard with increasing frequency, is: “four-dollar-per-gallon gasoline is cheap.” Robert Bryce, a Texas journalist and author who has written extensively about energy recently wrote in Slate (www.slate.com) that “gasoline … has … been far too cheap for far too long…and recent price increases are only beginning to reflect its real value.” He says, “Americans are living in a fantasy land when it comes to energy and energy prices.”

 

But if this is fantasyland, where do we go from here? Mr. Bryce raises a number of interesting issues but doesn’t answer this question. First, he points out that “on an inflation-adjusted basis, the current price … is only slightly higher [20%] than it was in 1922.” But 1922 is an odd date for comparison. Then, the scale of oil refining, gasoline distribution and car ownership was minute. Cars and the need for gasoline were rare luxury items. Second, he points out that “American gasoline is … dirt-cheap compared with gas in other countries. British motorists are currently paying about $8.38 per gallon…[Norwegians]…$8.73. In 2007, out of the 32 industrialized countries surveyed by the International Energy Agency, only…Mexico had cheaper gasoline than the United States.”

 

Mr. Bryce notes that the consequences of relatively low US gas prices, especially when compared to the overall costs of vehicle ownership, were “a buying binge that put millions of giant SUVs, pickups, and other gas guzzlers on our roads.” Mr. Bryce seems to be advancing resigned acceptance of a market-based approach. As he says, “Given the ever-increasing global demand for oil products—during the first quarter of this year, China's oil consumption jumped by 16.5 percent—and the increasing costs associated with finding, producing, and refining crude oil, it makes sense that today's motorists are paying more….”. But his free market advocacy is in aid of achieving an engineered result: a decline a US gas consumption by forcing a change “to hybrid vehicles, smaller cars, and public transit.”