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Latest Headlines
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May 12, 2008 3:53:00 PM MST
No evidence gas prices have dampened consumer thirst in carbon tax debate (Carbon-Tax-Consumers)
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OTTAWA _ Experts say a carbon tax that raises fuel prices is unlikely to dramatically influence personal energy consumption, but will change business behaviour.
They are supported by statistical evidence that suggests consumer addiction to fossil fuels has not been affected by recent soaring gasoline prices.
And that spike at the pumps _ which has taken the average Canadian price of gasoline to around $1.25 per litre, and climbing _ likely dwarfs in size any politically saleable carbon tax levy.
It´s an important reminder as the policy debate heats up. The Liberals are floating the carbon tax idea as a possible central plank in their next federal election platform, causing alarm even within their own ranks about a voter revolt.
But if market price bumps are any indication, the debate will be more about consumer perception than reality.
"It´s important to say from the outset that I don´t think anyone believes a carbon tax is going to be the main way that we reduce emissions from transportation," Matthew Bramley of the Pembina Institute said Monday.
About half of Canada´s greenhouse gas emissions comes from large industry, noted Bramley, an energy expert at the left-leaning think tank.
"In a business decision-making environment, a carbon tax most certainly will change decisions. Decisions are made on the hard numbers and even a relatively small cost increase can certainly prompt quick, big changes toward cleaner energy choices.
"I think that´s much less effective with consumers."
Despite widespread water-cooler griping about energy costs, Canadians have been remarkably impervious to price signals over the past year.
Gas sales in 2007, when gas first spiked above $1 a litre causing widespread consternation, were up 3.8 per cent over 2006. The previous 10-year average increase had been about 1.5 per cent annually.
In January and February this year, gas sales were still up 2.8 per cent over the previous year, according to Statistics Canada. And in March _ the most recent month available _ gas sales were up 0.3 per cent while sales of all refined petroleum products were up two per cent.
The numbers don´t capture the eye-popping, overnight nickel-per-litre increments of the past six weeks. Nor do they take into account the very recent predictions that gas is on its way to $1.40 this summer and won´t be coming back down.
Yet counter-intuitive evidence remains that drivers will still be locked behind the wheel.
Chris White, vice-president of public affairs at the Canadian Automobile Association, said the numbers of drivers seeking trip planning advice is up this spring over 2007.
It´s not clear whether this is because travellers are seeking more fuel efficient routes, or because fewer Canadians are travelling overseas and therefore are looking for North American driving destinations.
CAA, through its association with Hertz, is also aware that rental car bookings are up five per cent over last year.
"I suspect more Canadians will probably be travelling within the North American market or domestically . . . and will be needing to drive," said White.
"It´s all still relatively anecdotal because the season is just beginning."
Joe D´Cruz, an air industry expert from the Rotman School of Management in Toronto, said air travel generally isn´t very price sensitive, so the announcement of fuel surcharges by Canada´s major airlines won´t have an immediate impact.
D´Cruz noted that European gas prices can be more than three times the Canadian price _ a fact reflected by the much smaller vehicle fleet on European roads.
"It requires a significant difference in price to show itself up in immediate consumer behaviour," he said.
D´Cruz still promotes the carbon tax model.
"The big impact of a carbon tax is that it makes visible to individuals the impact of their behaviour. It´s not so much that they´ll be paying a little bit more, but they´ll become more conscious of their environmental footprint."
Whether consumers, who have kept the pedal to the metal through double-digit market price hikes, will punish a political party for proposing a few cents a litre carbon tax is an interesting question in psychology.
Stephen Hazell of the Sierra Club notes that both Republican presidential nominee John McCain and Democratic hopeful Hillary Clinton have held out the promise of U.S. gas tax cuts.
"It´s a completely bone-headed move done for craven political purposes," said Hazell. "But it´s out there and they´re responding to stuff they´re hearing at the door."
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