Force Refiners to Sell Retail Outlets

[maplesyrup]

Force refiners to sell gas stations, N.S. urged

Isn't it about time we forced these transnationals to stop conducting business in a conflict of interest position. Either one is a refiner or a retailer. Being both is a serious conflict of interest, and our governments need to intervene and put a stop to it.

[Cartman]

Agreed MS. It is about time to act on this one.

[Hugo]

Where do you see a conflict of interest and what are you hoping will be accomplished?

[maplesyrup]

Energy is an essential service. Just like you don't want people to strike who work in essential services, we don't need price fixing going on, among the transnationals as well.

Gasoline retailers should be able to purchase their product from the refinery of their choice.

Everyone has seen these wild fluctuations in price which has nothing to do with the price of crude oil. It is price-fixing, and the corporate executives should be in jail.

I'm very tired of the business community not walking the talk. They say they believe in free enterprise but the moment they can they form monopolies, and cut out free enterprise. Hypocracy is what it is.

[August1991]

Dear MS,

It is price-fixing, and the corporate executives should be in jail.

If the refineries were separated from the retailers, what would stop the refineries from forming a monopoly and engaging in price fixing at the wholesale level?

But there's another problem. There are different corporations that own different refineries (retail chains). You suggest that these corporations have formed a "monopoly" and are fixing prices. IOW, they must be working together.

But I just saw a cool movie which showed me that The Corporation is a psychopath with no feelings and no sense of loyalty. What stops one corporation from cheating on the others and trying to take a bigger piece of the pie? I understand The Corporation is also greedy.

Yours,

Confused in Montreal

[idealisttotheend]

My, Confused in Montreal, you've developed quite the sense of humour recently.

Unfortunately you're understanding of economics remains dogmatic.

If:

What stops one corporation from cheating on the others and trying to take a bigger piece of the pie? I understand The Corporation is also greedy.

Why:

Are gas prices always the same in any given area. How does this particular market survive with an essentially similiar product (loyalty plans non-withstanding) and clearly advertised prices with little location or service advantage between companies.

Why oh why are the prices always the same?

[maplesyrup]

Maybe we need government refineries to break up these business monopolies.

In Nova Scotia Imperial Oil controls 90% of the refineries, which is much too big a share of the pie for any one company to control, if we really believe in a free market, eh!

[Hugo]

First off, if you separate refiner and retailer the consumer will pay a higher price. Right now there's only one place to make a profit: at the pump. At every other stage in the process the oil stays in the same hands. However, once separated, the refiner has to sell to the retailer for a profit, and the retailer will have to recompense himself from the consumer, and pump prices will go up.

Secondly, if you really want to know why gas prices are so high, realise that 40-50% of the gas price is tax. According to the CAA, government rakes in about $10bn in gasoline taxes but only a "very small percentage" is reinvested in road construction and highway development.

Basically, this problem is that people like Maplesyrup don't want to put their money where their mouths are. The reason gas prices are so high is because people are clamouring for the government to pump money into all sorts of programs, but the government doesn't have any money of its own, and when the government comes knocking they complain and whine that somebody else should pick up the tab.

MJ Erwin & Associates and Petro-Canada Refining & Marketing Profit - Audited Financials has stated that, of total gasoline prices, only about 3% is profit. In 2003, on average, 17% went to refining and marketing, 37% to crude costs, and 43% to taxation leaving a measly 3%.

[maplesyrup]

-from today's Globe:

If independent retailers owned gas stations instead of the refineries, do you think the price of gasoline would go down?

Yes

3316 votes (50 %)

No

3328 votes (50 %)