Industry Minister Tony Clement calling on the oil companies to justify gas prices may disclose some practices of the energy distribution process but, unfortunately, it will do nothing to stabilize gas prices. I suspect a similar fate if Jack Layton's idea of an ombudsman is granted.
I have a not-so-original idea to bring fair prices at the pump. Create a Crown corporation for the extraction of oil from the Alberta oilsands.
The refinery process, distribution and retail sale of gasoline would be left to the private sector as usual but the production of crude needs to be centralized.
Typically, the nature of business dictates the large profit margins are available for the producer or manufacturer of a product. It's the producers of oil that are reaping the profits and the retailers, wholesalers and refiners are operating on tight margins.
If Canada was to create a Crown corporation to extract the oil out of Alberta, the profit to the oil companies would be in our pockets. Venezuela, Iran and Saudi Arabia are countries that are operating nearly in this type of structure, while offering their citizens gas at pennies a litre.
There is no downside to this plan unless you are a shareholder of one of the oil companies or politically benefiting from them.
The political right wing may argue that the larger oil companies would not want to do business in Canada or that OPEC may be upset.
I ask you, who cares what OPEC or the oil companies think? OPEC regulates the world oil supply thus dramatically affecting oil prices. Imagine for a moment that our bread supply is controlled by a cartel of a few bakeries allowed to manipulate production to set costs.
There would be riots in our streets.
In Ontario, there is a general thought, expressed regularly, that taxes or the government have control of our prices. The fact is they have little control.
The taxes are based on a percentage of the net sale and the price of oil is set by the commodities markets. A politician seriously challenging the big oil companies has a short political lifespan.
The delivery of products and services by Crown corporations is a common and wellrespected practice worldwide and by nature, protects the most vulnerable. OPEC and their accomplices are the only group of people benefiting from these prices.
I would love to hear from someone who thinks otherwise or can express a common benefit to these high prices.
