Toronto Sun: Damage is done: Soaring fuel costs have taken their toll despite recent drop

[marmar]

By LINDA LEATHERDALE, TORONTO SUN


Gouging pump prices may be climbing down from highs of close to $1.40 a litre -- falling another 1.7 cents today to $1.272 in the GTA -- but the damage has been done.

This should make green advocates feverishly committed to stomping out carbon footprints very happy. Cash-strapped consumers, who account for two-thirds of our economy, are feeling the pinch and leaving their cars at home -- while pink slips that have hit fast and furious in our automotive sector start showing up in other sectors, like tourism.

The proof is in the latest retail numbers, where Statistics Canada reports just a 2.4% hike in gas station receipts in May, despite an 8.8% month-to-month jump in gasoline prices. Last year, we were paying a little more than $1 a litre, and a year before that 85 cents -- a price level Prime Minister Stephen Harper once promised to help ease by axing the GST at the pumps, where it's a tax on tax.

Instead, Harper's Tories cut the GST from 7% to 5% across the board, yet there's no way to know whether the savings are being passed on at the pumps or profit-rich oil giants are pocketing the money.

Meanwhile, Liberal MP Dan Mc-Teague, on his website, says retail margins at the pumps are quietly heading higher, up this week by 0.5 cents for regular gasoline, and 5 cents-7 cents for diesel and premium grades.

That's adding another 6.5 cents to the price of regular gas, McTeague says, adding that that is "in contrast to their line of several years ago that they could get by with a margin of 2 cents a litre."

The modest drop at the pumps, where diesel today falls 1.3 cents to $1.345 a litre, comes as world oil prices tumbled another $4 a barrel yesterday, falling to as low as $125.63 US a barrel, before closing at $127.40 for August delivery on the New York Mercantile Exchange. That's the fourth decline in the past five trading sessions, bringing it to its lowest level since June.

Mark my words. Demand for gasoline has fallen even more since May, as more Canadians cancel road trips this summer. South of the border, a MasterCard survey suggests demand fell 3.3% last week, after falling 2.2% since the start of the year. ......(more)

The complete piece is at: http://www.torontosun.com/Money/2008/07/23/6237196-sun.html