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A real pain in the gas

"Unlike the United States, motor fuel prices are a sleeper issue here in Canada. At least politicians, at both the federal and provincial levels, are sleepwalking through it.

Stateside, it's one of the three key issues gripping the U.S. mid-term elections (illegal immigrants and Iraq being the others) and threatening to oust the Republicans from the House and Senate, ruining George W. Bush's final two years in office.

It may be resting peacefully in the minds of the politicians here, but Canadians are wide awake on how they are getting hosed at the pumps.

Serious discontent

According to a damning - if you are an oil company or elected official - Ipsos-Reid poll released yesterday, there's a serious mood of discontent out there. That's even true in Alberta, where high energy prices bring mega-millions into the provincial treasury and have touched off the largest energy boom in the province's history.

Albertans seriously resent the high cost of gas and diesel. So much so that only 40% of Albertans polled in late April and early May feel that gas prices are set 'fairly.'

In Ontario the number who feel that gouging is going on rises to 70%. In Quebec the distrust level hits 82%.

Poll respondents also have an inkling where the extra cash is going. Overall, 71% feel that energy company prices are excessive and the feds should bring in a 'special tax on windfall profits' that are made from gas.

Maritimers were the real cost-control hawks at 79%. In Alberta, only 37% "disagreed" with going after the pump pirates. Not an overwhelming endorsement of the leaderless Alberta Tories, especially considering oilsands outfits are getting their bitumen virtually royalty-free until payout in these times of record world oil prices.

Prime Minister Stephen Harper's bold plan to roll back the hated GST by 1% apparently didn't impress Canadian gasoline consumers either.

Asked if the 1% token gesture was an "appropriate" response, seven in 10 Canadians gave Stevo the thumbs-down.
But the most distressing response to the poll - if you're a politician - was what Canadians answered when asked if the government should step in and regulate gasoline prices.

Across the country, 72% back the government getting involved in setting gasoline prices. In Atlantic Canada the support was greatest at 87%. That makes sense because some provinces already regulate pump prices, and the Nova Scotia election is being fought over throwing a noose around gas companies.

But the most telling number comes from free-enterprising, redneck Alberta, where only 39% said no to government intervention at the pump.

The inflationary effect of high gasoline prices may be about to have repercussions in other parts of the economy. It's the old ripple effect.

The C.D. Howe Institute circled the wagons this week and asked a panel of economic experts what Bank of Canada governor Dave Dodge should do on May 24 when he sets Canada's trendsetting interest rate again. It was a six-to-five split decision. But the slim majority recommended Dodge nudge up the rate by another 25 basis points to 4.25%.
Some even said the country's top money man must continue jacking up rates "significantly above the current level" to keep inflation at 2%.

Higher mortgage rates

If this translates into higher mortgage rates - which it inevitably will - then it could put even more pressure on Alberta consumers.

Yesterday, the Royal Bank of Canada revealed that we face the second-worst affordability in the country when it comes to buying a house.

"The good times for the Alberta economy have come at a cost to homeowners," the RBC Financial Group gloomed. House prices may be up 25% over a year ago, and income and employment growth may be the envy of the country.

"However the price of appreciation and higher mortgage rates outpaced this growth."

Remember what happened the last time Canadians were seriously stung with high gasoline prices and a roaring Alberta economy? Pierre Trudeau was able to muster enough political clout to bring in the national energy program to skim excessive windfall profits.

Stephen Harper is no Trudeau. But the Ipsos- Reid poll shows there's serious hurt across Canada - and right here in Oilberta - over gasoline prices.

Klein and Harper have been warned.

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