GN jacks up fuel prices

As expected, the Government of Nunavut raised its subsidized retail prices for all fuel products this week, to compensate for the sharply rising cost of crude oil.

This means Nunavummiut started paying 9.6 cents a litre more for all fuel products as of Sept. 1.

For gasoline consumers in Nunavut, prices per litre will rise to the following levels:

* Iqaluit: $1.05
* Rankin Inlet: $1.06
* Cambridge Bay: $1.0

These figures, however, don’t reflect the real economic cost of shipping and distributing gasoline and other petroleum products throughout Nunavut.

The GN uses a special pot of money called a “revolving fund” to subsidize fuel prices, and to keep them at a level that consumers can afford. That revolving fund now stands at about $110 million.

World crude oil prices – driven by increased demand in China and the U.S. and by a shortage of capacity at refineries – have risen by more than 50 per cent this year, from about $40 a barrel to above $60.

But the price that the GN is now charging consumers amounts to an increase of only 10 per cent or less when applied to gasoline.

So it’s not clear how much extra cash the GN will have to put into its revolving fund this year, and how that will affect the GN’s financial health.

But a GN press release issued this week suggests that the territorial government may look to Ottawa for help in dealing with skyrocketing energy costs.

“The Government of Nunavut will continue to support Nunavummiut by keeping the price increase as low as possible. When the Government of Canada and Nunavut engage in discussions about the economic condition of the territory, the issue of fuel prices, transportation costs and the social and economic impacts on Nunavut communities will be brought forward,” the press release says.

The GN press release, in an attempt to play up the difference between Nunavut prices and those in the rest of the country, contains a chart comparing Nunavut gasoline prices with those in a selected range of Canadian cities.

It shows, for example, that a litre of gas now costs about $1.12 in Montreal and about $1.14 in Yellowknife.

Until this week, Nunavummiut were not affected by the price shocks that have been battering consumers in the rest of Canada all summer.

That’s because we’ve been consuming fuel bought at last year’s relatively lower prices and shipped on last year’s sealift. But in cities like Montreal, Toronto and Vancouver, consumers have paid more than $1 a litre since July.

The GN now spends about one-fifth of its budget on energy costs.