EDITORIAL: What’s behind the rise of inflation?

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There are several reasons for rising inflation in Canada, but fuel costs are mostly to blame. In May, the rate of inflation rose year-over-year by 7.7 per cent, the biggest increase since January 1983. But the biggest increase within those May numbers was for fuel. Gas prices were 48 per cent higher than in May 2021.

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EDITORIAL: What’s behind the rise of inflation? Back to video

Food costs were also up, by 8.8 per cent. But some of that could be attributed to the cost of shipping, which requires fuel.

The bottom line is that fuel – its availability and cost to motorists and industry – is a driving factor behind some of the economic difficulty facing Canadians.

There are several reasons for rising fuel costs. Part of it is the war in Ukraine. Part of it is increased travel demands following two years of pandemic. Part of it appears to be excessive profit-taking by the oil companies, especially after a few years of pandemic-induced losses. And part of it is the taxes that accompany the price of fuel.

With the exception of taxes, much of this is out of our control. But taxes can be reduced or suspended. Many of the provinces have suspended or rolled back their taxes on fuel, Ontario included.

But the federal government hasn’t. It has avoided any public discussion about a tax reduction or holiday. Indeed, the feds raised its carbon tax on April 1, while publicly ignoring the tax’s contribution to inflationary forces.

That’s not to say that a tax suspension or holiday would lower inflation. But it wouldn’t contribute to its increase.

Furthermore, the fact that energy prices appear to be a driving force behind inflation should tell us that the energy industry remains vitally important to our economy. We can’t live without it. And even as the cost of energy continues to rise, the demand hasn’t diminished.

And yet our government continues to wage an ideological war against oil and gas. This week it began consultations concerning capping and cutting emissions from the sector. The feds basically want to set a ceiling on these companies’ business – and at a time when demand for their product continues to be strong, so strong that prices are rising.

Wouldn’t it make more sense to allow Canada’s oil and gas sector to logically respond to demand by increasing its production?

In every case, increasing supply is viewed as the answer to most inflationary forces. Even the federal government admits that. But its ideology won’t allow it to do the same for oil and gas.

-Peter Epp