The cost at the Bowser is going to go up for two reasons, one internal and one foreign.
And the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production by 100,000 barrels a day.
Both decisions will cause gas prices to skyrocket.
Why is the gas tax cut about to expire?
The reason the gas tax returns to its normal price is simple: money.
The federal government gets a substantial amount of money from the excise tax (which is another name for a tax), which is usually 44 cents per liter. But since March 30, the government has been collecting half.
And while it sucks to pay 25 cents more per gallon in October than you did in September, the reality is that the gas excise tax is a big part of the federal budget.
If you weren’t paying the gas excise tax, the federal government would most likely collect that money from you from somewhere else, such as an increase in income taxes or GST.
Excise tax money goes into the general fund of the federal budget, rather than funding anything in particular.
When does the gas tax cut expire?
The special tax on gasoline will return to its full price on September 29 of this year.
Which means that, all things being equal, prices will rise 25.3 cents overnight.
This means that the price is a little more than double: the excise tax increases twice a year based on movements in the consumer price index.
Why is OPEC cutting production?
OPEC is cutting production for the same simple reason: money.
By reducing the amount of oil they pump, they will drive up the price.
The 100,000 barrels a day they will not drill is not a substantial amount, just 0.1 percent.
But they hope the supply cut will stop the drop in oil prices that has been going on for a few months.
This comes despite pleas from the United States, which had begged OPEC to boost output at lower prices.
But the higher prices are, the more OPEC produces.
The most expensive and cheapest countries in the world in gasoline
OPEC is an intergovernmental organization of 13 member countries that account for 81 percent of “proven” oil reserves.
Due to its control of supply, OPEC can operate a cartel with impunity.
And unfortunately, most of the OPEC countries do not have good relations with Australia.
The OPEC countries are Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of Congo, Saudi Arabia, United Arab Emirates, and Venezuela.
Associated oil-producing nations of Azerbaijan, Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Oman, the Philippines, Russia, Sudan and South Sudan will also cut output in line with OPEC’s decision.
Why can’t non-OPEC countries drill more oil?
There is nothing stopping non-OPEC countries from extracting more oil.
But for many of the non-OPEC nations, governments cannot instruct oil companies to produce more.
And when oil prices go up, there’s not much incentive for Shell or BP to drill so much that prices go down again.