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Expensive Gas this Summer in Canada

Not surprisingly we are already being warned that gasoline prices may start to jump this summer (again), which is a little late, given gasoline is now above $1.30 in Ottawa, and does not look to be dropping any time soon.

With this in mind, this may mean a continued increase in Inflation. The arithmetic is quite simple:

  • Shipping prices will need to increase which means an across the board price increase
  • Food prices will increase as it will cost farmers more to plant and harvest
  • etc., etc., etc.,

This is really nothing new, but will it drive more folks to use their cars less? I don’t think so, the price of Gasoline seems to be fairly Inelastic (to bandy about an actual term from Economics), in that a continuing increase in price does not seem to decrease the usage of the product (much like cigarette prices sky rocketing hasn’t stopped smokers from smoking).

How will I fight this? I will continue to use the bus, for the forseeable future, and I will continue to buy my Gas at Costco, as well. There are plenty of interesting ways to try to save gasoline as well, which I have discussed here and there are other places where you can get gas saving tips as well, but my question good reader is are there interesting ways to save gas that you don’t hear folks talking about?

No, I don’t want to hear about how you are siphoning gas from  your neighbour’s car, or the like, but what about other ways?

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Gas Price Fixing in Ontario? Really?!?!?

How do I write that in a more sarcastic way?

Given the news in Ottawa has a section where they publish “the price of gas tomorrow”, how is this possible without price-fixing?

The Competition Bureau (yes that is really a part of our government) has fined Mr. Gas, Canadian Tire, and Pioneer Energy up to about $2M for price-fixing in 2007.  The accused fixers plead guilty with the following being reported:

The pleas are as follows:

  • Pioneer Energy LP pleaded guilty to price-fixing in Kingston and Brockville, and was fined $985,000;
  • Canadian Tire Corporation pleaded guilty to price-fixing in Kingston and Brockville, and was fined $900,000; and
  • Mr. Gas pleaded guilty to price-fixing in Brockville and was fined $150,000.

That is from the Competition bureau’s website.

An interesting explanation about proving price-fixing is the following statement by the Competition bureau:

Price-fixing conspiracies are difficult to detect and prove. High or identical prices are not in and of themselves evidence of criminal activity. There must be evidence that competitors have made an illegal agreement to set those prices. When there are substantiated allegations of wrongdoing in the marketplace, the Bureau will not hesitate to investigate.

I guess I am glad they will investigate, and I suppose it is hard to prove, and it makes me wonder if the Competition Bureau might get targeted for cuts in the coming budget slashing exercise? Wouldn’t that be a convenient turn of events?

Who is surprised that there is price-fixing in Ontario gas stations? What will I be writing about next? The Sun may rise tomorrow morning? There are reports of the earth rotating around the sun?

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Costco Gas: Now This is Interesting

Costco just made the question about whether folks should pay for a membership or not much more interesting, because in Ottawa they are also Costco Gas. It is not close by my house (yet), but still another interesting lure to get a membership. (since this original publishing a gas station will be opening a few blocks from my house).

You can buy a membership for you and your spouse for $55 (an amount which may have increased since then) (according to this page), so you need to save at least that much every year to justify buying the membership. If anyone cares to argue this, please comment.

At the Costco gas station, gasoline is selling for about 5 cents a litre cheaper than most gas stations in Ottawa (there are a few that area a little cheaper, but most are 5 cents more). This means to get up to the membership fee, you should have to buy about 1100 litres of gasoline over the year (assuming an average of 5 cents saving).  While this sounds like a lot, depending on what kind of vehicle you drive (and how many your family drives).

To fill up my wife’s van can take up to 80 litres of gas, so to get to 1100 litres that is less than 15 fill ups (from empty), and this is not counting my Toyota Carola (which takes about 40 litres to fill up as well).

The caveats that I would say you need to take into consideration would be:

  • How close is the Costco to your house. The Costco Gas is actually on the way to work for me, and the store is only about 8 km from my house, so I am not going way out of my way to fill up the car, but if you have to drive a long distance to get cheaper gas, you need to take that into consideration.
  • Is this good quality gas? I have no idea where they are getting their fuel from, but it seems fine to me.
  • They only stock normal and premium (two grades) and they seem to run out of fuel sometimes (given the number of cars there I am not surprised).
  • Getting the gas seems complicated to some people (they had a lot of attendants there to explain, even though it is a self-serve station), the procedure is:
    • Swipe your Costco Membership card first (or you can’t have any gas)
    • Swipe your payment card, however the only payments taken are Costco Amex, Interac Direct Withdrawal or Costco cash cards (so you can’t use other credit cards with them).
  • Right now the station is pretty darn busy, so you do have to wait to get to a pump, and they caused a traffic jam on Hunt Club on Saturday
The other interesting question is will this cause the price of gas in Ottawa (or at least in the area around the station) to drop? We shall see, they only opened a few days ago.

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$2 Per Gallon Gasoline IS Possible

I will even state that 50 cent per litre gasoline in Canada is entirely possible.

How can I make this outlandish a statement? First a lot of Canada’s gasoline price is actually TAX so we only really need to cut the price of Gasoline in half to reach this lofty goal, but that is not the only reason.

Let me secondly tell you a quick story about my days at Nortel. When I started working there in the mid-80’s we have Vision 2000, where our goal was to be the Number 1 Telecommunications company in the World by the year 2000. Surprisingly Nortel reached that goal, however, by that time, it no longer mattered, because the Internet and Data networks had changed the world so much, no one was buying that much Telecomm equipment any more. We kind of ended up like being “The Smartest Man in the WWE” ™, who cares?

This is where my $2 per gallon and 50 cent per litre argument is actually based, in the next 20 years or so, there will either be technological breakthroughs and changes so drastic that the price of Gasoline (and Oil in general) will no longer matter any more, or, we will be completely f*cked, it’s that simple. The way that Gasoline prices and Oil prices are being manipulated and the fact that it is a dwindling resource (depending on the model you look at), something must change in 20 years, or the world economy will fall over (as opposed to this year’s version of the great economic implosion).

My guess (and hope), is that thanks to technology in general, computers in specific, that model will take over in terms of the use of energy and gasoline, and there will be a dramatic drop in the demand for Oil and Gasoline thus driving the price through the floor. This sudden dramatic drop will not do Canada any favors, so hopefully we won’t be the Gas Can for North America by then (but I suspect we will be).

The major thing stopping the widespread use of electric power for cars and transport is Battery and the ability to store energy (and how long it takes to recharge the batteries). Each year there are new(er) ideas coming forward, which hopefully will cause a version of Moore’s Law for battery lifetime (doubling capacity every  two years) or something close to that, and once that happens, gasoline will no longer be as important.

Am I completely off my nut? Maybe, I have been wrong before (remember Bill Gates saying, “Who could need more than 640K of memory in a computer”), but my guess is something will change and the ludicrous promise of Gasoline at $2 per gallon is possible, but maybe not in the next few years, and by that time, no one will care!

Any nay sayers

 

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I Know I Should Take the Bus

The Arithmetic behind the decision about why I drive to work instead of taking the bus is ridiculously simple to calculate, yet I ignore the obvious savings that I would make taking the bus, why (you may well ask)?

Take The Bus

In Ottawa, if I got a monthly pass it could cost $91.50 or I could splurge and get an Express Pass for $114.00, there is also a $5 yearly charge for  a new picture pass, that we can ignore. That’s the entire cost (monetarily) of taking the bus for me, but wait, remember that this is also a tax deductible expense so the actual after tax cost of this pass is lower than the above two prices (and I can get a yearly pass for even less).

That’s the bottom line in terms of cost, I won’t get esoteric and throw in cost of newspapers to read on the bus, or interesting Podcast subscription costs, that doesn’t really count either.

Take My Car

The costs here add up rather quickly, but let’s go at them one at a time:

  1. My car is actually paid off, but given what it cost me, I could assume about a $250 a month charge to buy the car, but in this little experiment, let’s just leave out that cost (but keep it in mind, remember it’s total cost).
  2. My weekly gas charges are about $25 a week, and that is going to go up with gas currently at $1.10 a liter in Ottawa, so that translates to about $112.50 a month in gas costs (being liberal).
  3. To insure my car it costs about $700 a year, so that makes for about $60 a month in insurance charges
  4. Here is the real tipping point, I have to pay for parking at work, currently $6 a day (I can’t get a monthly pass yet, I am on a waiting list), given there is about 22 working days in a month, I am paying $132.00 in parking a month.
  5. Maintenance? It’s a pretty well behaved beast for now, but I am paying about $80 a month in maintenance charges for the year (I had a brake job done, and it is a 7 year old car).
  6. If I ignore (1) then I should take into account the dropping value of my car? I never understand that so we’ll leave that out of the calculations too.

So, that means I am spending $384 a month to run my car to work, and that is After Tax money, and it is not (in any way shape or form) tax deductible (and I have not even included the cost of buying the car).

It’s Obvious Right?

Nope, because I end up weighing the fact that my drive to work takes 30 minutes usually, and I can go to work and return from work, whenever I want. I don’t have to stand next to snarfing or coughing folk, picking up the latest flu, and I have my own environment around me (i.e. listen to whatever music I want).

If I take the bus, the trip might take anywhere from 60 minutes to 90 minutes depending on whether I make my connections, and I must go when the bus runs, and if I miss a connection, it could take even longer.

I know I should take the bus, and I may eventually relent and do that, but for now I continue to take my car to work, but convenience and how I value my time must be factored into this (anyone wishing ti Kibitz on these numbers feel free) decision point. I don’t have that many vices left in my life: I don’t smoke, I don’t drink lattes, and I don’t drink in bars, but is this just me rationalizing a bad financial decision, I am mature enough to say, Maybe.

This again proves that on this blog, the catchphrase to remember is Do as I SAY, not as I DO!

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