The price of YK gas might be more complicated than you think

On EDGE: Opinion

Look, I get it. Gas is expensive. It’s been stuck at $1.39 a litre in Yellowknife for what seems like an eternity.

And yes, you look around the country and see pump prices dropping everywhere. A litre of gas in much of Alberta is now under a dollar. Even here in Dawson City, the price fell 11 cents last week.

Before you get jealous: A litre of unleaded here still costs $1.48. This past spring, on a road trip up the Sahtu winter road, we routinely paid $1.70 a litre or more. And if you thought that was bad, in Norway, the average per-litre price is $2.54.

Still, with global oil prices plummeting, it’s hard not to look at that $100 receipt from Wink’s and curse under your breath. A CBC story captured the Yellowknife zeitgeist last week with the headline: “Gas prices in Yellowknife continue to defy market forces.”

Except that’s only partially true. Yes, oil prices are dropping, but that’s far from the whole story when it comes to running a gas station. First off, gas stations in general are not, as you might be tempted to think, a license to print money. Profit margins are notoriously thin: the three per cent average margin posted by U.S. gas stations in 2013 amounted to a bumper year.

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Local reality vs. market force

And while the price of crude oil, a global benchmark, is undoubtedly a market force, so too are local realities. Wages are more expensive than most places in the south. Chips, pop, slushie mix, all of that stuff has to be shipped in, adding more overhead costs. And let’s not forget about electricity prices, which have been the subject of so much attention (including in these pages) lately. Gas stations have to keep the lights on too.

In the same CBC story, Yellowknife Centre MLA Robert Hawkins identifies what may be the most important market force of all: a lack of competition. “Even Yellowknife is considered a small, almost closed market where typically the everyday family or consumer is held hostage.”

Okay, maybe “held hostage” is a tad hyperbolic, as the NWT’s continuing trend of outward migration indicates. But when it comes to filling up your tank, where else are you going to go? There are four real gas stations in town, and until the cardlock starts selling smokes and lottery tickets, let’s be honest, most of us won’t bother. Until one of Yellowknife’s gas stations makes a break for it and cuts prices first, things will stay much as they are. And what incentive do they have to actually do that?

Regulate it?

Hawkins has proposed regulating gas prices, as is done by the Petroleum Products Divsion in smaller communities, or failing that, encouraging the GNWT’s consumer affairs division to investigate prices. City councillor Adrian Bell wants to strike a committee to study prices. Regulation appears to be a non-starter for the government. Apart from finding concrete evidence of collusion, it’s hard to see what the impact of investigations or studies would be.

This supply-side focus also reveals an interesting blind spot in the GNWT’s recent efforts on energy. When it comes to electricity, NT Hydro is more than happy to offer you tips on conservation. The GNWT offers rebates on energy efficient appliances.

But the report from the 2012 energy charette doesn’t discuss energy consumption via transportation at all, and it didn’t come up during the most recent round of discussions. The Arctic Energy Alliance’s website has a section on transportation. It contains a video with instructions on how to install a block heater timer and a link to Natural Resources Canada’s tips on driving more efficiently.

According to NRCan’s 2014 fuel consumption guide which calculates the annual cost of gassing up every vehicle on the market (at $1.30 per litre, close enough for our purposes here), you’re looking at between $1,500 and $5,000 per year just for gas.

What you never hear is talk about carpooling, park-and-ride lots or rideshare programs, although the City is offering swank new low-floor buses and a realignment of transit routes. Yes, plenty of people need their vehicles for work. I don’t expect an electrician to get around town on a bus. But stand on Franklin and marvel at the number of single-occupant cars that pass you at rush hour. There are plenty of people who drive downtown just to leave their car sitting there from 9 to 5. If gas prices are such a burden, perhaps they ought to try leaving their cars in the driveway every once in a while.


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