According to a survey done by RATESDOTCA in mid-April, 58 per cent of Canadians have adjusted how they drive due to soaring gas prices.
UNBC Senior Instructor in the School of Business, Charles Scott says while gas prices are rising, it may actually be the price of other things that’s causing people to drive less.
“I think you need to look at this in the context of what else is changing as well, especially food,” Scott said.
“That’s about to go up significantly as well, so the real hit to people as they’re struggling to meet gas prices in the context of the other things that are going up.”
“Normally, there would be a pretty reasonable amount of tolerance for gas price changes before you’d make some structural changes, but when you’re spending more for food, you’re spending more for energy, you’re spending more for housing, there’s not as much flexibility when all of those things are going up at the same time.”
Scott says the price of food is going to be the biggest pill to swallow, and a large part of the increase in food prices is the Russian-Ukrainian war.
“Between them, Russia and Ukraine account for 30% of the wheat exports of the planet, and there’s a lot of people who require wheat to live, and there’s going to be 30% less of it,” Scott explained.
“They’re also big exporters of certain kinds of lentils, certain kinds edible oils, so the extent to which the Russian and Ukrainian breadbasket is simply not available to large parts of the world means there’s a lot less food quickly.”
Scott added that we’re in new territory with the sanctions that have been imposed on Russia.
“We simply haven’t had this extensive a set of sanctions imposed as quickly before that we can compare it to, so we didn’t really know how effective it would be, and there are certain things that proved to be much more effective than expert observers had thought,” he said.
Scott believes there are going to be opportunities for foods and other products to be produced locally.
“There’s going to be some opportunities that come out of this, less so about gas prices, but keep in mind that as the threats that are occurring around the world start to really take effect, you’re going to see more decisions to re-shore supply chains,” Scott explained.
“So some of the things we relied on China to do, there’s less confidence that we should be exposing ourselves to a society that is increasingly seen as potentially somebody that could be hostile.”
One of the examples Scott noted was that 80 per cent of the world’s rare earth that is used to make electronics, computer control systems, and magnets comes from China.
“A big part of the energy transition in vehicles requires elements that come out of Russia. We’re having to change where we get it from because we can’t rely on Russia, and increasingly, we’re not sure we should be relying on China for those things,” he said.
“That presents business opportunities in our area, because we are surrounded by it, Northern BC has a lot of deposits of rare earth. Expect to see more mines opening.”
Scott says there are also opportunities to grow more foods locally.
“It may be more in greenhouses than in fields, but one of the major changes that will happen, and it might be a little slower happening because it’ll be a take us a while to pick it up,” he said.
“I would anticipate an increased focus on food production in this area, because we have many assets that are needed, and as the price goes up, you can start to compete for labour with sawmills, and pulp mills, and mines.”