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Just the market regulating itself (lemmy.ml)

submitted 3 weeks ago by yogthos@lemmy.ml to c/canada@lemmy.ca

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[-] Windex007@lemmy.world 93 points 3 weeks ago* (last edited 3 weeks ago)

I worked at a Tim Hortons when GST was lowered from 7 to 5.

The day it went into effect, we raised the price of everything such that the customers paid exactly the same amount after-tax than they did before.

All that happened was It moved that 2% from going to the budget of the government to pay for Healthcare and roads, to going to a holdings company to pay for executive bonuses.

I remember when the doofus conservatives in my town understood that absolutely nothing got cheaper for them, they were like "nothing gained, nothing lost, big deal. Who cares"

Like, no, doofus, something WAS lost. Those taxes were paying for services we all benefitted from.

I will NEVER support the cutting of a sales tax.

[-] GreenBeard@lemmy.ca 29 points 3 weeks ago

I will NEVER support the cutting of a sales tax.

I mean, I won't speak for you, but a lot of sales taxes are regressive, hurting the average consumer a lot more than those who can and should be paying more (on account of their benefiting from the common infrastructure more, while also placing greater strain on it), but I will concede there are sales taxes that make sense, and fuel taxes are one of them.

[-] Windex007@lemmy.world 23 points 3 weeks ago* (last edited 3 weeks ago)

I will argue that the introduction of many sales taxes were a mistake...

But once they exist, removing them won't help consumers because the market will just raise prices to suck up the difference. It's a ratchet effect.

Edit: If we ever want to "reverse" a tax, then the solution is just to send people thier cash back after the fact. Like the Carbon rebate program (that 80% of Canadian households ended up getting more back in rebates then the paid in carbon taxes. Great program. Good politics to reverse, but terrible policy to reverse)

[-] CanadaPlus@futurology.today 3 points 3 weeks ago* (last edited 3 weeks ago)

Yup. Income taxes are just a better way to collect funding.

If you want to add externalities back into the price of something, or literally just fund a government service the buyer is about to use like roads, it's a different story.

[-] twopi@lemmy.ca 1 points 2 weeks ago

I would like to know more about this. All I've known is the 5% GST. Is there a place I can read more on about it?

[-] mech@feddit.org 54 points 3 weeks ago* (last edited 3 weeks ago)

The exact same thing happened in Germany.
Starting tomorrow, taxes on fuel are lowered by 17 cents per liter.
Today, fuel prices increased by around 17 cents per liter across the board.
So tomorrow, gas stations can just revert to yesterday's prices and pocket the tax.

Boy, am I glad we're donating our tax money to global megacorporations, instead of, I don't know, giving people free train tickets or building pop-up bicycle paths.

[-] echodot@feddit.uk 15 points 3 weeks ago

Yeah the right wing parties were going on about this in the UK the other day. Saying the government should lower fuel taxes. But everybody knows that it wouldn't make any difference, so we might as well keep taxes where they are.

Removing fuel tax only makes sense if it comes with new maximum pricing laws.

[-] panda_abyss@lemmy.ca 40 points 3 weeks ago

Prices are based on what the market will pay, not the cost of materials.

Petro Can has like 12000 gas stations, and the other companies have similar numbers. We've basically given all the market to a few companies.

The truth is there's no gas price algorithm. There are some data inputs and local gas stations compete based on their nearby competition prices, but broadly there's a group of men in a room who set the prices to whatever they want.

When costs go up, they immediately increase prices. When costs go down, they wait and see what their competitors do.

So you can see why a few companies owning all the gas stations creates inelastic sticky prices that don't go down for weeks. If you take away the gas tax, well, are Shell and Crappy Tire dropping prices? Not yet, so we won't either. Easy decision.

Gas companies used to pay to have people drive around and report gas prices from their competitors back to corporate. Now they pay gas buddy for bulk API access to the numbers users report to Gas Buddy in the app for free.

I am definitely not recommending you do this, but if many people were to constantly report lower gas prices at gas stations in the app, that would feed into the sole data they use to set their prices and lower gas prices in the area.

If in theory Gas Buddy data became unreliable for some reason it would take a long time for these companies to decide to spend money and start hiring gas price checkers again.

[-] yogthos@lemmy.ml 30 points 3 weeks ago

You are describing a natural monopoly and why private ownership of it sucks. That is the whole point.

Gas stations are a natural monopoly. You cannot have twenty competing pipelines running to the same neighborhood. You cannot have fifteen different refinery complexes in every city. The infrastructure is too expensive and too duplicative. So what happens is a handful of companies end up owning everything and they just coordinate as a cartel instead of competing.

PetroCanada used to be a crown corporation. It existed precisely because we recognized that fuel distribution is too important to leave to private profit extraction. It kept prices honest because there was a public option that could undercut the private cartels. Then we privatized it and pretended the market would fix everything. Surprise surprise it did not.

The core problem is not algorithms or Gas Buddy or tax holidays. The core problem is that we allowed a natural monopoly to operate as a for profit business. When one company owns twelve thousand gas stations and the other three companies own similar numbers there is no competition. Market based pricing really means that a group of executives in a boardroom decide what number makes them the most money and then they all charge that number.

This is exactly why socialists argue for public ownership of critical infrastructure. Fuel distribution is a natural monopoly. Either the state owns it and sets prices at cost plus a reasonable margin or a cartel owns it and extracts every cent they can get away with. There is no third option where competition magically appears.

[-] UnderpantsWeevil@lemmy.world 10 points 3 weeks ago* (last edited 3 weeks ago)

Prices are based on what the market will pay, not the cost of materials.

I heard a take on this, which suggests price is more a measure of the value of labor rather than the cost of materials. Under more historical economic models, you were limited by your immediate regional supply of a good or service. And we would talk about shortages, droughts, and famines when the local supply was exhausted. The local labor force couldn't produce more commodities with the tools/conditions at hand, causing consumption to outpace available surplus.

Under a more modern market system, we no longer talk about "running out" of a given commodity. Instead, we talk about the price going beyond what we have available to pay. You'll walk into the grocery store and see a $10 banana. And it'll sit on the shelf till it rots, because nobody has $10 to spend on a banana. But it's only there because nobody can pay that price. The fact that there's no second banana in the stock room is obscured by the astronomically high price on display.

However, you do eventually get to the point where people need the commodity more than they need the currency. That is, in effect, the cause of inflation. And then the banana gets sold, there's no second banana, and we reveal the real cost of materials in their absence. There's no supply chain bringing in more bananas because we've experienced a structural failure in the economy. The cost of maintaining infrastructure eclipsed what the owners/administrators were willing to front. We obscured it with a price signal until the bitter end.

And the empty shelves ultimately reveal what national administrators believe to be the value of the local population. It is not a question of commodity markets any longer, but of labor markets. You (the local public) aren't worth sending new supplies to, because we (the capitalist economic administrators) no longer consider you productive laborers.

[-] Tiresia@slrpnk.net 3 points 3 weeks ago

For any liberals reading this; this is basic supply and demand in a situation with surplus labor.

[-] Mavvik@lemmy.ca 1 points 3 weeks ago

This is an interesting perspective I haven't heard before. Are there historical examples of this happening?

[-] UnderpantsWeevil@lemmy.world 2 points 3 weeks ago* (last edited 3 weeks ago)

I would say the classic example is the American Ghost Town. Typically townships that sprang up during the Frontier Era to serve some transitory economic function (mining colony, overland shipping stop, cattle depot) that were rendered obsolete with the railroads and subsequently abandoned.

https://www.geotab.com/ghost-towns/

Named by German prospectors who came looking for gold, Berlin was a company mining town. Established in the 1880s, the town was largely abandoned by the 1910s after the mine closed in response to strike action. The well-preserved structures are now part of Berlin-Ichthyosaur State Park, known for fossil discoveries of a prehistoric marine mammal.

Kennicott was established as a mining town in 1903 to take advantage of the area’s copper deposits (the emergence of electric power having increased copper’s value considerably). The mines were depleted by 1938 and the town largely abandoned. Since the 1970s, the town has become an increasingly popular tourist destination.

More of a ghost fortress than a ghost town, Fort Jefferson’s construction began in 1846 as part of Florida’s defenses against piracy. It also served as a prison during the Civil War, then became a quarantine station and a navy refuelling point before it was abandoned in 1906 due to hurricane damage. Fort Jefferson has been a National Monument since 1935 and is open to tourists. It continues to be the largest brick structure in the U.S.

Incidentally, a lot of the "town was abandoned in..." correspond with the Great Depression, when interstate commerce had all but collapsed due to failures of major financial, communication, and transport companies of the era.

[-] Mavvik@lemmy.ca 2 points 3 weeks ago

Ok I think I get it now, it is basically the flaw behind resource allocation through capitalism. The cost of supplying these mining towns does not match their ability to pay for those supplies after the mine goes bust. Do I have that right?

[-] UnderpantsWeevil@lemmy.world 2 points 3 weeks ago

Functionally, yeah.

There's a virtuous cycle of commerce that can emerge out of a professional services or manufacturing sector if people are willing to invest in it. But if you see the economy as extractive, you stop putting money in as soon as you assume there's no more wealth to pull out.

[-] Mavvik@lemmy.ca 1 points 3 weeks ago

Its an interesting way to frame the problem compared to how it might be typically framed as "not enough jobs" or "wages aren't high enough" or the new favorite among Canadian politicians of a "productivity crisis"

[-] dom@lemmy.ca 26 points 3 weeks ago

Tax cuts are a short term solution. Whenever the price jumps, conservatives are quick to point out to the cost of the gas tax. Well the gas tax didn't jump up, so that is clearly not what cause the jump.

Yes, lowering the gas tax would reduce the price. Until the next jump, then youre back at square one.

[-] GreenBeard@lemmy.ca 5 points 3 weeks ago

Yeah, it's a parachute, not a concrete floor. It'll slow things down, it won't stop the price spiral.

[-] athatet@lemmy.zip 15 points 3 weeks ago

I hate twitter so much. I have to read the top part twice because it turns out you’re actually supposed to read the bottom part first cause that’s where all the context is. Actually how about fuck yourself.

[-] Kolanaki@pawb.social 11 points 3 weeks ago

It's looking like god damn Xcom up in here.

[-] ValueSubtracted@startrek.website 10 points 3 weeks ago

The suggestion here is that the prices rose because the tax was lifted? That seems pretty easily refuted by looking at international news.

[-] P1k1e@lemmy.world 22 points 3 weeks ago

No I'm pretty sure it's just saying the tax cut didn't do anything at all. Oils still going up, but the cut made zero difference

[-] ValueSubtracted@startrek.website 7 points 3 weeks ago

I mean, it's still 10 cents per litre less than it would have been had the tax not been lifted...unless the implication is that the price wouldn't have gone up without the tax reduction (which is pretty obviously not true).

I don't like the tax being lifted - I think it's largely populist nonsense - but it's at least a little dishonest to say there's no difference at all.

[-] LostWon@lemmy.ca 3 points 3 weeks ago

There is an argument for that possibility actually, but it obviously can't be proven with 100% certainty since we can't know what specific factors went into the pricing decision. When businesses know ordinary people are willing and able to spend more money (and in this case they did, because people were already spending more on the taxed amount), they often raise their prices accordingly. Algorithmic pricing is the trial-and-error version of this same propensity in other industries with oligopolies or cartels.

[-] ValueSubtracted@startrek.website 1 points 3 weeks ago

It would be a far more compelling argument if gas prices were only rising in Canada, where taxes been lifted. But that ain't the case.

[-] LostWon@lemmy.ca 2 points 3 weeks ago* (last edited 3 weeks ago)

Although it's quite possible it could have been an earlier price hike than necessary (to maintain the same profit at that location), I do concede that's difficult to prove. Post-Covid "greedflation" was a prominent example that there can be widespread opportunism around economic shocks, so I'm always watching for the possibility this will recur.

[-] cybermass@lemmy.ca 9 points 3 weeks ago

I think that's what the original post was implying but yeah it's two fold.

Tax cut won't lower prices, it will just increase company profit margins
Prices went up because of Iran war

Only way to reduce prices is to reduce demand. Small modular nuclear reactors are the way and we have companies in Canada working on them yet I don't hear of any government help in those projects.

[-] Upperhand@lemmy.world 3 points 3 weeks ago

How is a small nuclear reactor going to run cars? This is coming from an ev driver. How about investing in our own oil industry, because, let's be honest, it's not going anywhere anytime soon. Instead we send our oil to be refined elsewhere then buying it back at high rates and hurt us, just do it in our own country and sell it abroad, especially since we have the 4th largest oil reserves on the planet. Lowering fuel costs lower costs of a lot of things as long as we actually hold companies responsible. And before you say everyone just get evs, they are expensive and not a lot can get one.

[-] yogthos@lemmy.ml 11 points 3 weeks ago

What we should actually be doing is nationalizing our oil industry, and then using the money it produces to fund a transition towards clean energy. Of course, that's never going to happen under neoliberalism.

[-] Upperhand@lemmy.world 3 points 3 weeks ago

Sadly, that won't happen with anyone. People are corruptible. It would have to be a system that can't be used for financial gain for any one individual or group. But I agree with you nonetheless. The worst part is that it wouldn't be all that hard, but the ones in charge will not relinquish for our betterment.

[-] yogthos@lemmy.ml 6 points 3 weeks ago

I mean look at China successfully transitioning towards clean energy using state owned enterprise. These things are certainly possible to do. The problem is that our political system creates all the wrong incentives.

[-] corsicanguppy@lemmy.ca 6 points 3 weeks ago

It's cute how math-challenged people thought a 2% discount was going to be a significant deal.

This is even before the corps just absorbed it anyway.

[-] MacroCyclo@lemmy.ca 6 points 3 weeks ago

Isn't the price hike from the switch to summer fuel and the tax cut in place because of that switch?

[-] yogthos@lemmy.ml 8 points 3 weeks ago

The price hike is because market price is now starting to catch up with the physical price. And since there's now a global oil shortage, the price is going to keep going up.

[-] AMBSC@lemmy.ca 1 points 2 weeks ago

In a word no

[-] TheFeatureCreature@lemmy.ca 5 points 3 weeks ago

It did drop here a little bit. From around $2.20/L down to $2.10/L

[-] FreshParsnip@lemmy.ca 4 points 3 weeks ago

What goes up must come down, except bubbles and prices

[-] Gmak2442@lemmy.ca 3 points 3 weeks ago

That's why we can pass laws.

[-] FUCKING_CUNO@lemmy.dbzer0.com 2 points 3 weeks ago

Yea, I'm sure the oil and gas lobby are a bunch of pushovers /s

[-] HertzDentalBar@lemmy.blahaj.zone 3 points 3 weeks ago

2.24 this morning, 2.16 on my way home. Plz stop with this capitalism shit.

[-] CanadaPlus@futurology.today 2 points 3 weeks ago

It's not really surprising in the short run. Competition takes a while to work (or not work).

Of course, in the long run prices are going to go up at least through the US midterms. If anything comes out of the removal of the gas tax it's just a lull in the increases.

[-] CanIFishHere@lemmy.ca -2 points 3 weeks ago

If gas taxes have no impact, the price of gas would be the same in BC and Alberta.

[-] ikidd@lemmy.dbzer0.com 5 points 3 weeks ago

What kind of logic is that? Shipping doesn't exist?

[-] CanIFishHere@lemmy.ca 0 points 3 weeks ago

Gas doesn't go from the oil sands to the pump. Shipping is not the reason gas is cheaper in Alberta over BC. BC has the highest gas taxes, and the highest gas prices in Canada.

[-] ikidd@lemmy.dbzer0.com 4 points 3 weeks ago

It goes from the refineries in Edmonton to where ever it's going. Even if you had a refinery onsite, you need to get the crude to another province either by truck, train or pipeline. Moving it thousands of km isn't free, despite whatever passes for your economic knowledge. That's why gas is almost $4/L in New Zealand, to use an obvious outlier to illustrate the point.

Yes, BC has higher fuel taxes. But your supposition was that "If gas taxes have no impact, the price of gas would be the same in BC and Alberta." Which is utter and complete nonsense.

[-] CanIFishHere@lemmy.ca 2 points 3 weeks ago* (last edited 3 weeks ago)

Your shipping cost example doesn't justify the varying costs of gas across the country and it far more closely is tied to gas taxes. Gas does not get more expensive just because it's further from Alberta. Regardless of your insults. Easy enough to do a tax/price per litre comparison.