The $55 Watermelon: A Transportation Story

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For immediate release: 
Sep 26, 2008

Editorial by Paul R. Landry, President & CEO

Once upon a time – back in August 2008 – a $55 watermelon appeared on a store shelf in a remote community called Nain in Northern Labrador. Outrage ensued, even though the $55 price tag was a mistake and should have read $38. Is this story restricted to a hard-to-reach outpost in Labrador? Or is it also a preview of what to expect in BC?

The trucking industry is bracing for new and additional taxes and fees that will continue to put upward pressure on transportation costs – increases that will inevitably end up on price stickers throughout BC. Because trucks deliver 90 percent of consumer goods, businesses and consumers alike will inevitably feel the effects of these costs. 

BC’s carbon tax is currently 2.69 cents per litre on diesel fuel and is set to double every two years until 2012. Next year, the carbon tax will grant Lower Mainland BC the honour of paying the highest fuel taxes in North America. By 2012, it will have cost the trucking industry over $460 million. But that’s just the beginning.

The BC government is also considering a cap-and-trade permit program as part of its Climate Action Plan. The second phase of this program proposes to charge producers and distributors of diesel fuel for emissions. Distributors will likely pass their share of that cost on to the trucking industry at the pump. Who knows how much that will add to a litre of diesel? The carbon tax has already demonstrated that even pennies can add up to millions.  

Also threatening is the Province’s “renewable fuel” standard, requiring the diesel and gasoline pools in BC to contain an average five percent of renewable fuels – currently that means biodiesel for diesel and ethanol for gasoline – by January 1, 2010. We don’t know yet what the price per litre will be for biodiesel blends, but the experience in other jurisdictions is that it will be more expensive than diesel to produce and distribute. Plus, we do know that biodiesel blends aren’t as energy efficient as straight diesel and come with higher maintenance costs.

And, again by 2012 (when its funding reserve will be gone), TransLink faces a projected annual deficit of approximately $150 million a year. It must also stake a portion of the provincial government’s $14-billion transit expansion plan. Current legislation allows TransLink to increase fuel taxes up to 3 cents per litre in Metro Vancouver. Based on diesel fuel sales for 2007, TransLink could collect at least another $26.6 million from the industry annually beginning in 2012.

Finally, on top of increasing fuel costs will come toll payments, as new or improved bridges open over the Fraser River: Golden Ears, Port Mann and, potentially, Patullo. Improved infrastructure should result in less congestion, which will reduce costs for trucking companies. But the big question is whether the toll charges will be greater than what the industry is saving.

Tens of millions, year after year. It’s not hard to see where such unremitting cost increases will lead for consumers, retailers, manufacturers, importers and exporters.

Can we expect a $55 watermelon in BC? Probably not. But we may soon find ourselves trying hard to stretch that $55 at the local grocery store.