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At the moment this story goes online, gasoline in Tsawwassen, B.C. is $1.45 a litre. Drive a mere two kilometres south into Point Roberts, WA, however, and gas can be had for the equivalent of CAD$1 per litre.

What gives? Canada has more oil than everyone except Venezuela and Saudi Arabia and we remain the single largest foreign supplier of U.S. oil. So why are we paying a nearly 50 per cent premium on a product that by all rights should be flowing from our kitchen faucets?

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All your questions are answered below. Special thanks to Jason Parent, a consultant with Kent Group Ltd. who was particularly patient with our questions on the downstream petroleum market.

Our status as a major oil producer is surprisingly irrelevant to what we pay for oil products

Think of oil like a big, juicy bluefin tuna. If a Nova Scotia fisherman pulls up a 400 kg tuna, he’s not going to sell it to the diner down the street if he knows he can sell it to Japan for $600,000. Similarly, the minute Alberta pumps out of a barrel of oil, it’s going to be sold to whoever’s willing to pay the highest price. As a result, even if your next door neighbour is the Hebron oil platform, if you want to buy oil you’ve got to be prepared to pony up roughly the same price that a New Yorker would pay. The technical term for this is that we Canadians are “price takers”; if we want oil, we have to pay the same as the “price makers” in the much larger U.S. market. If you don’t like this system, you can always do like Pierre Trudeau and impose an artificially low national price for oil. But a word of warning; it didn’t go so well last time.