Oil industry is supply managed

The oil industry is controlling the supply of gasoline and therefore the price at retail by controlling refining capacity.

Dear Editor:

Anyone who has bought gasoline lately has probably come to the same conclusion I have…the oil industry in Canada is supply managed. Just like eggs and milk, the price at the pump is controlled. As consumers we are told numerous explanations for the gap between the price of oil and the high price at retail. “Our dollar is low and we are having to buy imported fuel from Washington state, taxes are too high, or our consumption is too much.”

Bottom line, there is a quota on supply. It’s not government sanctioned, but the oil industry is controlling the supply of gasoline and therefore the price at retail by controlling refining capacity.

The interesting thing here is that government is not about to change the supply curve.

We pass no laws to stop the export of crude oil (as exists in the United States). The consideration of at least three pipelines to expand exports, Keystone, Northern Gateway and twinning Kinder Morgan, each costing billions.

There is no support for Mr. Black’s refinery proposal, also costing billions. It would have increased supply.

Not even the Harper conservatives are prepared to fiddle with an industry sector that has the resources to spend billions, create jobs, and the economic spin-offs which the oil industry can.

Any talk of “energy self sufficiency” or doing “what’s best in the interest of consumers” is complete political rhetoric. The feds will shave 3.25 per cent off the income of the dairy producers to get the Trans Pacific Partnership going but will not mess with the oil industry. If there is a dependency on Washington state for refined gasoline while pipelines for export are built through B.C., so be it. Supply management is what’s best for the industry.

The overall impact of a supply managed resource is astounding, no wonder government isn’t about change a thing. Estimates are that the tar sands contribute 18 per cent of the Canadian GDP. A federal and provincial budget surplus or deficit depends on the price of oil. Workers are living in the Okanagan or elsewhere and commuting by air to Fort McMurray because they make so much money.

And one realization jumps out. You don’t need Kevin O’Leary capitalism for the economy to succeed. The money the oil industry generates is enough that even the most conservative capitalists are not going dismantle the current system. And that’s what’s really ironic.

Those bastions of conservatism in Alberta, Ralph Klein and Peter Lougheed developed and built an Alberta economy, an oil and gas industry with a socialist component: supply management. Who knew?

At this point even Rachel Notley doesn’t seem like she’s that far off economically. It is simply economic reality as opposed to political imagery.

We will all continue to pay at the pump because the oil industry in Canada is supply managed.

Nothing else explains the prices we pay.

Fred Danenhower

Summerland

 

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