Friday, October 5, 2007

Alternatives

You know, as much as we collectively hear from manufacturers about how bad the rising dollar is (and that's hard to sympathize with as anything but a special interest when we get jobs reports like this), a low dollar would be worse.

There would be riots in the streets. After all, let's remember that Joe Clark's government fell on a motion to introduce a gas tax of 4 cents on the litre.

Suppose that the Canadian dollar was pegged to the US, or had depreciated alongside, or that Canada had adopted the greenback; something like that. If anyone remembers the CAD being at 62 cents, they probably also remember such calls for reform.

If we take the numbers provided by the department of Finance, who assert that the price of gas is 48% derived from crude oil prices, and assume a 70 cent dollar, instead of one at par, with oil at $80, some quick (and dirty) calculations yield the following:

Current gas price in St. John's at the station one block away from my humble abode: $1.108 per litre.
Hypothetical gas price: $1.273.

That is, for those not proficient at subtraction, an extra 16.5 cents on every litre. Adjusting for inflation from 1979, that's about 7 cents a litre extra. 4 < 7.

Okay, I'm not seriously suggesting that we'd get riots over this (this is, after all, Canada), but right now the strong loonie is saving you ten bucks (in today's money) every time you fill up. As my grandmother would say, "Better than a kick in the pants."

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