The marketing of gasoline in Canada is based on two facts of life here. One is that the average Canadian is abysmally deficient in simple mathematics and the other is that we have two measurement systems here -imperial and metric. We use a particularly difficult to comprehend metric measure for mileage i.e. how many liters of gas your vehicle will use to go 100km. This measure makes no sense to anyone. Consequently the average Canadian driver is unable to :
1. Calculate the miles per gal for his or her vehicle
2. Calculate the cost per mile to operate the vehicle
3. Compare the price of fuel in Canada to that charged in the USA which uses a different volume measure the US gallon.
4. Comprehend the percentage of the fuel cost that is actually taxes
Because of all, this the simple minded but trusting and friendly hard working Canuck is only able to comprehend how much it costs to fill his tank. And normally he or she is unable to fill their tank so they pay what they can afford to buy at the time which may be anything from $5 worth to one or two twenties or they just put it on a credit card with some credit left on it and pay not only for the gas but an 18% or more loan to finance it!
When you think about it if you buy gas with a twenty dollar bill and say " give me $20 worth (or pump it yourself) the price of gas doesn't go up - its still $20 and this is part of the problem - some people just don't get it! Ask anyone at a gas station how many people still buy gas $20 or less at a time and prepare to be shocked.
As a result of this Canadians have been unable to do the math to help them arrive at a decision on the most appropriate type of vehicle to drive. They continued to purchase large SUV's and Pickups when in fact they could not afford them. They continued to purchase large cars when again they could not afford them. When you get a person who is too stupid to pound sand down a rat hole and expect him or her to make a good decision prepare to be annoyed and disappointed. They will invariably make the wrong or as I like to point out the stupid decision.
Some will say that I am full of bullshit. Ok then look at this page where Canucks try to fathom the differences between the US and Canadian prices for gas. It will almost make you cry. In fact if you a math teacher please do NOT look at this page because you will start to cry.
Having graduated from the best University in Canada - The University of Guelph I can do the math. And so I would like to offer some methods of achieving what up to this point you probably thought was impossible.
Comparing US gallon costs with costs of a Litre of fuel in Canada.
Step 1. Write down the US cost per gal on a slip of paper.
Step 2. Divide that amount by 3.785 this gives you the cost in US dollars for one litre of fuel.
Step 3. Use the current conversion factor to convert the US dollar amount to Canadian Dollars
Step 4 Look at the number -this is the cost in Canadian dollars for a litre of fuel purchased in the USA
Comparing the cost of a Canadian Imperial Gallon to the price of fuel purchased in the USA
1. Take the number is step 4 above and multiply it by 4.54
2. Look at the number this is the the price the Americans are paying in Canadian dollars for an imperial gallon of fuel in the USA.
How to figure out your miles per gallon in Canada
1. Fill your tank and note the KM on your odometer
2. Drive around until you need more gas and fill your tank again. Note the KM on your odometer and the number of litres needed for a fill.
3. Divide the number of litres by 4.54 to get the number of imperial gallons of fuel used.
4. Divide the number of km by 1.61 to get the number of miles driven.
5. Now divide the answer from #3 by the answer from #4 and you have the miles per imperial gallon your vehicle is getting
6. Should for some strange reason you feel an uncontrollable urge to know your mileage in miles per American gallon then simply substitute 3.78 instead of 4.54 in #3
I know that you will want an example so here goes.
Today's gas price (April 25/08) in Toronto is $1.20/L
so the price per Imperial gal is $5.45 and if you put it on your gas credit card and carry a balance for a year your actual cost will be approximately $6.64 a gallon
and the price per US gal (purchased in Canada) is $4.54
and the price of a US gal of gas in Detroit is $3.61 US or 3.66cdn
and finally the price of an Imperial gal of US gas (purchased in the USA) converted back to Canadian dollars is $4.39
So junior woodchucks the gas in Canada is exactly $1.06 a gallon MORE per imperial gallon in Canada than in the USA. The reason for that is the Canadian taxes are higher.
Now at this point it might be interesting for you to calculate your vehicles cost per mile for gas. Let me help you out. If you are driving an older motor home or a big honking older 3/4 ton with a big V8 you might get 10 mpg so your fuel cost would be 54 cents a mile. At 10,000 miles a year that's about 27 miles a day or $14.79 a day on average for gas
If you are driving a 1980's minivan (like me) you might get 20 miles to the gal and your fuel costs per mile would be about 27 cents per mile. At 10,000 miles a year thats about 27 miles a day or $7.29 a day on average for gas
If you are driving a honda civic wagon (also like me) and getting about 30 mpg your fuel costs are 18 cents a mile. At 10,000 miles a year that's about 27 miles a day or $4.86 a day on average for gas
If you are driving a reasonably fuel efficient vehicle that is getting 40 mpg your costs per mile are about 14 cents a mile. At 10,000 miles a year that's about 27 miles a day or $3.78 a day on average for gas
If you put on 10,000 miles a year then your fuel costs starting with the gasoline sucking motor home are $5400, $2700, $1800, $1400
The more miles you put on your vehicle the more you pay. Clearly when you look at the numbers and do the math it becomes evident what type of vehicle would best fit your driving requirements. The "Geo Metro" is a roller skate of a car but it gets fantastic gas mileage and owners tend to keep them forever. Here is a listing of Geo Metros on auction right now!
The great evil of the Canadian system of marketing fuel is that prices are in litres instead of imperial gallons. So there is a perception in the consumers mind that because the price is around a dollar which is not a lot of money that the commodity is cheap when in fact it is very expensive. Butchers use the same trick selling salami which is over $18 a pound and sounds very expensive so they price it in quantities of 100gms and it sounds cheaper.
Will all this help? no. Oh maybe there will be a couple of people that will look it over and the light will go on but most will cringe at the simple math and go back to figuring out how expensive gas is by the total cost to fill a tank. Many won't be able to fill a tank so it will be $10 or $20 at a time and that price doesn't go up you just get less gas.
I do apologize for being mean. But a person can only take a certain amount of stupidity before it gets just too frustrating. When I see a person in a big SUV cruising down the highway with nobody else in the vehicle and nothing in the cargo bay and he is crying like a girl about the price of fuel I feel like puking. Hey if he can afford it and doesn't think his neighbors will mind that he is killing the planet then go for it! But when I see a person that must commute to work get a gas guzzler and then whine that they can't afford the gas I really wonder if there is any hope.
The Europeans are a way ahead of us. They have successfully dealt with the high price of gas for decades. They drive very small cars which is part of the answer. They have good public transit which is another part of the answer. A lot of them use bikes which works too. They live closer to their jobs so that less travel is required. They have just ONE system of measurement (metric) so they understand costs and consumption better than we do. They are better at math than we are. They need to be in the UK gas is twice our price and is selling for over $11/gal in Germany!
Today I saw a classic English made Vauxhall Victor 1959 vintage go down the street. It had been restored and was in showroom condition. I had one of those for my first car. I got close to 50mpg depending on the driving conditions and it was fun to drive and provided excellent service and it even looked good. It looks even better today with a nice sized passenger compartment and very good headroom. That car is almost half a century old and it would STILL be a good car today in fact it would be a better car today because it was simple to repair, reliable, and sturdy.
And I better add this point. The price of gas per mile is just ONE of your operating costs for your vehicle. The depreciation is also a horrendous cost. At 30% per year your $30,000 looses $9,000 in value the first year and if you are putting 10,000 miles on it that comes to 90 cents per mile for your first year. Add the price of gas at about 18 cents per mile and the cost of insurance at about 7 cents per mile and then a miscellaneous charge for maintenance cleaning etc of 3 cents per mile and you have a ball park cost of $1.18/mile. Lets call it $1.20 mile. And at 10,000 miles a year and an average of 27 miles a day your daily vehicle cost for the first year is $32.40 That's $226.80 per week or
But that's not all. You see we haven't factored in the car loan yet and any interest. All we have done is include the depreciation, fuel and insurance. The depreciation is a not a cash expense it is a reduction in the value of your asset so you don't pay it with cash you would only incur that expense when your went back into the market and tried to sell your car. Think about that for a while.
I will let you figure out your car loan costs. Each car is different but its likely that somewhere in your papers you have the terms of the loan and you can use them to determine your actual cash flow for your transportation expenses. I'm not a drinking man myself but it might be a good idea to lay in a good supply of beer for after you do the calculations. It will not be pretty.
Many families in Canada have more than one vehicle in the family. So transportation costs have become a nightmare.
So where is all this leading? I have made a case that some of our transportation problems are simply due to how gasoline and vehicles are marketed in Canada and the inability of the average Canadian consumer to do the math that is absolutely necessary to understand what is going on as far as transportation costs are concerned. I have shown a way of calculating those costs and suggested that once you know them and the type of driving that you do you will be better placed to make a good decision regarding your transportation that will save you money.
There is an old saying. You can lead a horse to water but you can't make him scuba dive. The same sort of thing applies here. There is a way for you to reduce the amount of bullshit regarding your transportation costs. But you need to put in some work. Nobody will do the math for you because they want to sell you expensive cars, give you a gut wrenching loan and insurance that will take most of your disposable income, sell you as much gas as you can afford and basically suck your bank account dry.
I will leave now. And I do feel sorry for you. But you really need to do the work to understand where you sit. And again look to Europe. Those Europeans are smart. Look at the vehicles they drive. Look at the vehicles we drive. Duhhhhhhhh. Do the math.
Good luck eh!
Update May 2/2008 There was one ugly little fact that I left out of this discussion because I just didn't want to piss you off anymore. But thinking it over why not? So here goes.
In Canada in order to earn the money to pay for gas you need to use after tax money. That is to say that all the money you use to pay your gas bills are also taxed. This is a form of double taxation because not only do the federal and provincial governments tax your payroll earnings but they also tax the gasoline itself. So what you need to do to calculate your actual cost of gas is add in the taxes you pay on the money used to purchase the tax.
Here are the federal rates from our friends at revenue canada
15% on the first $37,885 of taxable income, +
22% on the next $37,884 of taxable income (on the portion of taxable income between $37,885 and $75,769), +
26% on the next $47,415 of taxable income (on the portion of taxable income between $75,769 and $123,184), +
29% of taxable income over $123,184.
and here are the provincial rates
Provincial / Territorial tax rates (combined chart) Provinces / Territories Rate(s) Newfoundland and Labrador 8.7% on the first $30,215 of taxable income, +
13.8% on the next $30,214, +
16.5% on the amount over $60,429Prince Edward Island 9.8% on the first $31,984 of taxable income, +
13.8% on the next $31,985, +
16.7% on the amount over $63,969Nova Scotia 8.79% on the first $29,590 of taxable income, +
14.95% on the next $29,590, +
16.67% on the next $33,820 +
17.5% on the amount over $93,000New Brunswick 10.12% on the first $34,836 of taxable income, +
15.48% on the next $34,837, +
16.8% on the next $43,600, +
17.95% on the amount over $113,273Ontario 6.05% on the first $36,020 of taxable income, +
9.15% on the next $36,021, +
11.16% on the amount over $72,041Manitoba 10.9% on the first $30,544 of taxable income, +
12.75% on the next $35,456, +
17.4% on the amount over $66,000Saskatchewan 11% on the first $39,135 of taxable income, +
13% on the next $72,679, +
15% on the amount over $111,814Alberta 10% of taxable income British Columbia 5.24% on the first $35,016 of taxable income, +
7.98% on the next $35,017, +
10.5% on the next $10,373, +
12.29% on the next $17,230, +
14.7% on the amount over $97,636Yukon 7.04% on the first $37,885 of taxable income, +
9.68% on the next $37,884, +
11.44% on the next $47,415, +
12.76% on the amount over $123,184Northwest Territories 5.9% on the first $35,986 of taxable income, +
8.6% on the next $35,987, +
12.2% on the next $45,038, +
14.05% on the amount over $117,011Nunavut 4% on the first $37,885 of taxable income, +
7% on the next $37,884, +
9% on the next $47,415, +
11.5% on the amount over $123,184
So as you will quickly be able to calculate (hahaha) lets take an example of a person in Ontario on a pension earning no more than $36,000 he or she will pay 6.05% provincial and 15% federal taxes or approximately 21.05%. So if the price is $5.45 a gallon you need to earn $6.60 to pay for it and your income taxes. If however you carry that balance on your credit card for say a year then your actual cost is $8.04 per imperial gallon. oh and that's just for the fuel. If you add depreciation its more and if you add your finance charges its more again and if you add maintenance its even more once more!!! ha!
And perhaps I should end this discussion now with a little note on stupidity. In fact perhaps you should visit our page on stupidity If you act stupid you will always pay the price. Its a sad but true fact of the universe.
"Just think how stupid the average person is,
and then realize that half of them are even stupider!"
--George CarlinYour friendly car salesman will not tell you about these facts because they want to sell you a car. Your banker won't mention them because they want to sell you a loan. Your media rep won't report on them because they are two complicated to explain to you. You are screwed. The advertisers are completely filling up your brains with bullshit making you want to march into the showrooms and sign your life away to buy the overpriced chunk of metal and plastic they are trying to sell you.
Actual printout from my son's 1998 Cadillac deVille proving that the fire breathing beast with a honking V8 engine pushing 275 ponies gets 70mpg!
Its a big world and we aren't all this stupid. Look at the folks in India. They are producing an affordable car at Tata Motors for $2500 that is reliable, well designed, economical and easy to maintain. The Italians and the French also have economical dependable cars but the Average Canuck spends slightly over 30,000 for their new cars and just over 40,000 for their new gas guzzling trucks. Go figure because the logic of it escapes me. Part of the problem is the fact we are swamped with bullshit.
But thanks to your friends at .....
You now have all the facts about gas prices to make your transportation decisions. Good luck eh! and show this to anyone with a car or thinking of buying a car-they will thank you for it.
Update May 29/08
The Corporate Secretary received a very good suggestion to research the differences between wellhead crude costs and market price for gasoline. (Thanks Doug!)
This is a complex area. We can say that the cost of crude from the Alberta oil sands is in the $40 ballpark range. One barrel of oil which is 159 litres produces approximately 80 litres of gasoline and many other products. There are refining costs and transportation and marketing costs to consider and government taxes which all appear in the actual selling price for gasoline at the pumps. But one can clearly see that there is a terrific margin between the cost of crude and the final price of gasoline at the pump. Another consideration is that not a lot of labour is involved as all of these processes are automated and occur in large volumes. Very significant capital investments are required.
There is another factor involved and that is greed. The government stands buy holding its nose as the gas pump prices go up because they are in on the scam too and so are the taxpayers who receive the benefits. Ever wonder by the good folks in Alberta don't pay any provincial sales tax? Its because YOU the consumer effectively pay their share for them. Ever wonder why the federal government is running a surplus these days? Because YOU are paying huge margins between the wellhead cost and cost at the pump and a portion of that money is being collected by the Federal and Provincial governments at hardly any cost to them. Its a sweet flow of cash and nobody involved wants to ruin the money machine.
The important factor here is that as the price of crude oil has increased the costs to produce it have remained stable depending on the location. For example the costs to pump oil in Saudi Arabia is much lower than the costs to extract oil in Alberta from the oil sands but in each case the costs have not changed dramatically. What has changed is the margin between cost and the final cost of gasoline at the pumps. This is why the oil companies have been making such huge profits.
Its fair to say that there is very little public understanding of costs between the well head or oil sands and the gas pumps. The reasons for this are partly the complexity of the topic and partly the reluctance of the media to even attempt to explain it and partly because up until now the public didn't care. The information is difficult to obtain as the oil companies own the information and really do not want to release it. Governments also make huge amounts of tax revenue from gasoline sales and they are not particularly interested in releasing facts about that. The higher the gas prices go the more money the government makes in taxes.
What can be done? The market will solve the problem over the long term. Trends for prices are up. Gas prices in the UK are twice what they are in Canada now. That will choke off demand. Prices will then fall and people will adapt to the new situation even if that means smaller or no cars and more walking, biking and public transportation.
Clearly we as individuals and our governments need a better appreciation of this topic are -the price of crude at the wellhead or oil sands and the final price of gasoline and home heating fuels. Unfair profits are being made by those who understand how the process works and we the people are paying for it. Not fair! Or as we say here - BULLSHIT!
Unfortunately in Canada today we have an official opposition in parliament that is more interested in investigating with great passion ex girlfriends and engaging in smear tactics than in doing the jobs they were elected and paid to do. The sorts of issues raised here are the very type of issues these very capable but underutilized MPs should be trying to solve.
Update June 1/2008
I looked around to see if somebody -anybody had done the math on products produced from a barrel of crude. Most that did just noted the 80 or so litres of gasoline you get from the 159 L barrel. But they ignored the rest and then tried to connect the value of the world price of crude to the pump price of the gasoline only. That's not really very accurate.
Ok so lets do the math:
First of all I did find a reference to one barrel of crude in California
Product percentage 183.34 L note 1 cost per L total gasoline 51.4 94.24L 1.33 $125.34 distillate fuel 15.3 28.05L 1.30 $36.46 jet fuel 12.3 22.55L 82.6 $18.62 still gas 5.4 marketable coke 5.0 residual fuel 3.3 liq. refinery gas 2.8 asphalt, road oil 1.7 other refined products 1.5 lubricants 0.9 total 99.6
I was only able to price some of the components of a barrel of oil but you get the picture -there is a level of complexity there that defies a simple explanation that can be dumbed down to the level of a slow fifth grader and placed on the six o'clock news or a column of a newspaper.
note 1 the refining process increases the original 42us gal barrel by 6.43 gal so in litres this means that the 159L barrel is now 183.34 L
Imagine the fun one could have with this bumper sticker and access to the spouses car, the boss's car, an environmentally incorrect SUV or whatever the possibilities and fun and endless. The cost is small. Don't get mad -get even!
Or- Buy the book that everyone is talking about! and learn everything you need to know about business in including that little trick the gas companies use called transfer pricing and marvel at the amount of profit an oil company makes per employee compared to the rest of society. Food for thought and understanding and funny too!
The Corporate Secretary has written what her Publisher describes as "The best damn book ever written on business in Canada by a Girl" further details here. Hurry before the first edition is sold out!
Update June 16/2008 I received several requests for methods to save on your gas bill so have included them in our ASK CAPT RON section where they are answered.
links
You could always go electric and here they are on auction right now!
Information on how you can run your car on water and gas and save huge amounts on your gas bills! Yes I know it sounds too good to be true but you should really look at this one!
Proof that 25% of the population is stupid Its a bit funny but true and uses the scientific method to prove something many of us had suspected
Please take me back to the home page eh lots of good stuff there -over 100 topics where bullshit is uncovered!
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