Why aren’t we crying over the pain at the pump?

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VANCOUVER (NEWS1130) – A hot summer and sky high gas prices — why aren’t we seeing tempers bubble over more often at the pump?

Despite a study from an online gas price tracker which found BC has the top 10 most expensive places to fill up in North America, drivers seem to be accepting their lot and shelling out close to a $1.50 per litre without much complaint.

“There’s an interesting thing going on, we call it reference pricing,” explains Simon Fraser University marketing professor Lindsay Meredith. “Reference price just means there’s a price out there and we all get used to paying it for a particular product. When the price of that product jumps, if it jumps substantially, then all hell breaks loose because people notice a big price increase.”

Meredith says if companies instead raise prices in small increments on a steady basis then people get used to a moving reference price.

“I think that’s what’s happened here in British Columbia, you’ve seen this steady, steady escalation in the price of gas and people are finally battle-hardened and a little weary. You’ll recall when these guys first started moving prices way back when it was around a buck a litre, people were in the streets with pitchforks and torches. Here we are now pushing close to a $1.50 and people shrug their shoulders and say ‘let’s get on with life.'”

He believes if people in other parts of Canada had to pay Vancouver gas prices, there would be riots.

“Out here we are so used to paying extra taxes to TransLink, the federal government — and by the way, they do very well off taxing gasoline — and the oil companies don’t have much in the way of real competition. In the end there a lot of little piggies in the trough doing very, very well and it’s unfortunate the consumers are getting nailed for all of this,” Meredith tells News1130.

He says when you strip the taxes out of gasoline price, the “rack rate” is influenced by the major Cherry Point refinery in Washington State.

“Our prices really ought to reflect Washington State prices once you factor all the taxation out of it. You know what? Once you get all the taxes out, we are still way behind the eightball here. There are some people here helping themselves out to pretty damn nice profits.”

Meredith says the upside is that consumers may actually hit a point where they start using less fossil fuel.

“In the end, if we go to electric cars, these guys will have killed their own golden goose by jacking up the price too much and being too greedy. People will finally say ‘take a hike.'”

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