One of my least favorite questions asked in election debates is, “what are you going to do about gas prices?”
The correct answer is, “nothing”, and I think the candidate probably knows that he can’t do anything about gas prices. Gasoline is a globally traded commodity, no particular country, and therefore no particular country’s policy is going to have a serious impact on gas prices. Not within the realm of political feasibility. Nuking the middle east would effect gas prices, so would banning imports, but in real life these things don’t happen.
Here we have Canadian and American gas prices moving in lockstep with each other. Of course Canadian prices are higher because the typical Canadian has less purchasing power, but the peaks and troughs are almost identical.
So if American or Canadian policy has a serious effect on gas prices, how can we understand this chart? As soon as the Canadian government does something that makes gas prices go up, the American government happens to do the exact same thing? As soon as the American government does something that makes gas prices go down, the Canadian government does the exact same thing? That’s quite a coincidence.
For more evidence, try the IGM Economic Experts.
