Gas watcher warns $1.20 a litre (Canada)

[PhishPhood]

Originally Posted by tgagneguam

For reference to metric-myopic people like myself, 1 U.S. gallon = 3.8 liters.


I'm determined to make my newly purchased, dual-fuel wood-burning/oil-burning furnace make sense long-term. Perhaps oil prices climbing could be just the trick.



I think people forget this, PhishPhood.

And the part of the low dollar that for some reason really irritates me is that U.S. assets can be had on the cheap for foreign firms. For some reason, I don't like to see American icons swallowed up by foreign companies, but as the dollar retreats to the basement, we will see more, not less, of that kind of activity. Yes, I know we live in a global age with "borderless" economies, but it bothers me, nonetheless.

Yes as the US$ retreats into the basement by say 20% then effectively everything we have, including everything that's nailed down, growing, and built on our native soil is on sale at 20% OFF!!.

When this last happened back in the 80's a good part of 'our' land and resources were simply bought by foreigners because the prices were so cheap; orange groves, cattle farms, wheat fields, Rockefeller Center, Pebble Beach and a certain tract of empty farmland north of Lexington KY which became Toyota Georgetown which was just south of a certain tract of empty farmland in Marysville OH which became Honda Marysville.

Unintended consequences.

[calgaryhhr]

Originally Posted by PhishPhood

Get off the Faux News pablum it weakens the brain.

It's not at all accurate that as fuel prices go up the more tax revenue is increased... unless you're in Cali. The price of the gas has nothing to do with how much revenue the Feds or state governments get. The Feds get 18.4 cents per gallon whether the price is $2/gal or $4/ gal. Ditto most states. Do you need a reference for this data. Try Google.

In fact when the price of fuel gets too high the Feds and most states lose tax revenue since people buy fewer gallons.

That may be some what true.

There is a flat, national excise tax on fuel which is $01.0 per litre and that portion obviously becomes a smaller percentage of the price as it rises. There are also provincial excise taxes which are flat and vary by province. Government revenue from these taxes will increase or decrease based on demand because they are flat.

On top of that there is also a Goods & Services Tax across Canada which is 5%. Obviously with higher prices that tax will generate more revenue. In some provinces they also charge an additional Provincial Sales Tax which varies from about 5% to 8%, I think. Some cities and regions even have local taxes on fuel. These government revenues increase when prices go up, ceteris paribus.

GST/PST/HST revenues do go into different coffers as compared with fuel excise tax. GST/PST/HST are not collected or broken down on a commodity basis.

[44 mpg by 2010]

A question to our Canadian friends ...

How much of the cost of a Liter of fuel is taxes?

Are the fuel taxes fixed OR a percentage?

In the US the State and Federal fuel taxes range between USD $0.35 and $0.50/gallon depending on the State.

I guess my question is almost answered.

However I am not certian about the decimal point in this statement ... "There is a flat, national excise tax on fuel which is $01.0 per litre and that portion obviously becomes a smaller percentage of the price as it rises."

[PAULSTS1]

Originally Posted by dindak

Gas prices will go higher, how high and when is the only question.

The weak US dollar is responsible for much of the recent hikes.

Also the fact that the dollar is no longer the World's Reserve Currency, and it is being replaced by the Euro at a much higher transaction price. Also when the dollar is adjusted soon for inflation, then here we will have gas at $10.00 per gallon. A $40K Volt is beginning to look "cheap."

[calgaryhhr]

Originally Posted by 44 mpg by 2010

A question to our Canadian friends ...

How much of the cost of a Liter of fuel is taxes?

Are the fuel taxes fixed OR a percentage?

In the US the State and Federal fuel taxes range between USD $0.35 and $0.50/gallon depending on the State.

I guess my question is almost answered.

However I am not certian about the decimal point in this statement ... "There is a flat, national excise tax on fuel which is $01.0 per litre and that portion obviously becomes a smaller percentage of the price as it rises."

Here is a link from the Canadian government (department of finance.)
http://www.fin.gc.ca/toc/2006/gas_tax-eng.asp

For some reason the tax data is updated to 2006 and this was released in late 2008. National GST is now 5% in Canada. Some of the provincial sales tax numbers might have changed as well (some provinces now have a "Harmonized Sales Tax" instead of GST and PST.)

The, overall, tax on one litre of gasoline is around 35%. Currently gasoline excise tax, on a national level, is around 10% ($0.10 per litre at an average pump prince of around $1.00) Provincially the gasoline excise tax is approximately 15% (average based on a pump price of around $1.00)

[Mustapha Mond]

Originally Posted by Variant

I really hope your other 700 posts are much more intelligent than that...

Such comments don't bother me much, they do earn an automatic ignore though. There are enough classy, knowledgeable and insightful posters here that I never hesitate to weed out the occasional wanker.

As to the topic at hand I'm glad I drive an econobox.
-Elliott

[nailhead425]

While gas prices may increase, I doubt that the overall price of oil and natural gas will.

I just got my yearly statement from our utility company. It details the state of energy and forecasts future rate adjustments. Our rate decreased by 2.5% from peak demand to peak demand. The reasoning is that they have forecasted a continue supression of oil and natural gas prices for 2010. I figure they are pretty accurate because prior to the oil price spike they requested and got a 2.5% increase in the peak rate to offset the climbing oil prices. So, it looks like the recessoin/depression has put us back to pre-2007oil price levels.

They use oil, natural gas, coal, hydro, and solar to generate power.

[calgaryhhr]

Originally Posted by nailhead425

While gas prices may increase, I doubt that the overall price of oil and natural gas will.

I just got my yearly statement from our utility company. It details the state of energy and forecasts future rate adjustments. Our rate decreased by 2.5% from peak demand to peak demand. The reasoning is that they have forecasted a continue supression of oil and natural gas prices for 2010. I figure they are pretty accurate because prior to the oil price spike they requested and got a 2.5% increase in the peak rate to offset the climbing oil prices. So, it looks like the recessoin/depression has put us back to pre-2007oil price levels.

They use oil, natural gas, coal, hydro, and solar to generate power.

I focus most of my investment efforts on commodity investments and in particular oil and gas (because I work in that field and follow the industry activity closely and hence I feel I know the industry and pricing fairly well.)

I've previously invested in crude oil futures and natural gas futures. I've been out of the crude oil market for the last two months because I just don't understand where it is going anymore and it has become very removed from supply/demand market fundamentals.

Natural gas has been my focus now. I think by January natural gas prices will probably be in the $6.50 range. I expect a substantial price shock a year from now. I'm think natural gas prices could be in the $15 range. My reasoning behind this is related to the slow down in natural gas drilling and production which has been experienced this last year. Natural gas inventories are huge right now and should keep prices stable throughout this winter but I think next year will have much higher natural gas prices.

[silvergoat2k6]

Originally Posted by nailhead425

They use oil, natural gas, coal, hydro, and solar to generate power.

You forgot uranium...or does Canada not have any nuclear power plants?

[dewey9315]

Amazing how we pay so much for Gas when Canada has the 2nd largest amount of oil in the world.

[doh]

Originally Posted by dewey9315

Amazing how we pay so much for Gas when Canada has the 2nd largest amount of oil in the world.

True, but our Oil is the most exspensive to refine into gas or other useable products.

If we would have given it another 1000-2000 years.

[marinerbc]

Originally Posted by silvergoat2k6

You forgot uranium...or does Canada not have any nuclear power plants?

We do, but they're sort of like your Uncle Phil; not allowed to talk about that.

Darlington and Pickering are about the only things keeping Hydro One going. Thank god BC Hydro is going to be building dams again...albeit privately.

[calgaryhhr]

Originally Posted by doh

True, but our Oil is the most exspensive to refine into gas or other useable products.

If we would have given it another 1000-2000 years.

What do you mean "if we would have given it another 1000-2000 years"???

Oils degrade from lighter type to heavier type because of biodegradation. The oil in the Alberta oil sands is of such composition because of millions of years of biodegradation at shallow/surface conditions.

[appman85]

Originally Posted by calgaryhhr

I focus most of my investment efforts on commodity investments and in particular oil and gas (because I work in that field and follow the industry activity closely and hence I feel I know the industry and pricing fairly well.)

I've previously invested in crude oil futures and natural gas futures. I've been out of the crude oil market for the last two months because I just don't understand where it is going anymore and it has become very removed from supply/demand market fundamentals.

Natural gas has been my focus now. I think by January natural gas prices will probably be in the $6.50 range. I expect a substantial price shock a year from now. I'm think natural gas prices could be in the $15 range. My reasoning behind this is related to the slow down in natural gas drilling and production which has been experienced this last year. Natural gas inventories are huge right now and should keep prices stable throughout this winter but I think next year will have much higher natural gas prices.

I don't claim to know anything, but just two weeks ago there was a huge article in my newspaper about natural gas. Apparantly, they have some new drilling equipment online that allows them to drill sideways as well as down. This appears to allow them to get much more natural gas than before. They also found many more natural gas wells, huge reserves.

Like I said, I don't claim to know anything, but after reading that article, I highly doubt natural gas prices will be shooting up since the supplies are local, new technology, and new reserves are being discovered often. These natural gas people were really excited about the new wells and drills.

Just a friendly heads up.

[calgaryhhr]

Originally Posted by appman85

I don't claim to know anything, but just two weeks ago there was a huge article in my newspaper about natural gas. Apparantly, they have some new drilling equipment online that allows them to drill sideways as well as down. This appears to allow them to get much more natural gas than before. They also found many more natural gas wells, huge reserves.

Like I said, I don't claim to know anything, but after reading that article, I highly doubt natural gas prices will be shooting up since the supplies are local, new technology, and new reserves are being discovered often. These natural gas people were really excited about the new wells and drills.

Just a friendly heads up.

This is all very true. Developments in shale gas have been the major buzz in the industry. My company is working on a small shale gas project in Oklahoma. The reserves associated with shale gas are quite large but also quite difficult to drill for and extract. Horizontal drilling technology and fracturing has gotten to the point where it is more feasible to produce these reserves. It is significantly more expensive to drill and complete a horizontal shale gas well (typically reaching lengths of 3000 to 5000m) as compared to a conventional natural gas well. Fracturing the shales requires significant volumes of water and sand and chemicals which is costly.

In Oklahoma it is estimated that producing shale gas runs a cost of about $6.50 to $7.50. Cost varies based on basins but it is relatively high compared with conventional natural gas. Of course, as drilling and technology costs come down it will become more profitable and better explored for (hence increases reserve volumes even more.)

The biggest problem is that recent economic conditions and natural gas inventory storage levels has really cut down on drilling activity. Hence there will be a bit of a delay in bringing new production online. Not only that but if and when economic conditions increase and drilling activity increases it will do so at a higher cost (ie. drilling crews will be in high demand as will chemicals and what not.)