11 September 2008

A simple question with no good answer

In the week ending September 9,  the average price of gasoline across Canada dropped by 1.9 cents per litre.

Read that again.

Gasoline prices dropped last week, on average by almost two whole cents.  That was regular.  Mid-grade and premium dropped by even more.

In some parts of the country, the drop on a litre of regular gasoline was as much as a nickel.

So how come it is that in Newfoundland and Labrador - like the other provinces using the bankrupt system of government price fixing - gasoline went up by a cent and a half this week?


Even George Murphy, who justifiably earned the respect of consumers for tracking gasoline retail prices with his superb price forecasts, can only offer answers to CBC News that make no sense.

If the loonie and the potential interruptions in supply from refinery shutdowns were the factors, then how come there were parts of the country which saw such dramatic decreases in gasoline prices last week?

Market forces, is the answer to that one.  The free market system working as it worked for everyone before government price fixing was introduced in 2001. 

Last week, markets without government price fixing typically saw a drop in the price consumers pay for gasoline.

In the places unfortunate enough to have a price fixed by government, gasoline went up.

It makes no sense.

Well, not unless you are an oil and gas company.