Rising gas prices will lead to the "greatest mass exodus of vehicles off North America's highways in history," a Canadian bank economist predicts.
CIBC World Markets chief economist Jeff Rubin anticipates gas prices rising to $7 (U.S.) a gallon by the summer of 2010 and crude oil reaching $200 a barrel, resulting in drastic changes in driving habits.
The average price of regular gas in Canada is $1.36 a liter ($5.17 U.S. a gallon), while prices in the United States have topped $4 a gallon on average.
Rubin predicts there will be 10-million fewer vehicles on U.S. roads by 2012 with average miles driven dropping 15 percent. In Canada, there will be 700,000 fewer cars and a 10 percent decrease in average kilometers driven.
In the United States, low-income families will account for the biggest change, whereas in Canada the greatest shift will come from middle-income earners, CIBC economist Benjamin Tal said.
Since more low-income Canadians have access to public transportation, it will be middle-class families giving up second or third cars, he said. Much of the higher taxes Canadians pay is invested in urban transit systems.
Dollars near parity, but prices higher
A survey shows a continuing gap in what Canadians pay for products compared with prices in the United States despite the near parity of the dollar.
A Bank of Montreal survey shows Canadians still pay 18 percent more for everything from cars to coffee.
Bank economist Douglas Porter said this is down from a 24 percent price spread last year when retailers explained they needed time to clear higher-cost inventory.
"Well, the loonie (dollar) has averaged almost parity over the past year, so time's up," he said.
Derek Nighbor of the Retail Council of Canada said prices are higher north of the border because of weaker economies of scale, higher labor and transportation costs, bilingual labeling and import taxes.
Most significant price drops were for books, down 8.7 percent; new cars, off 6.6 percent; and clothing, down 5.1 percent.
News in brief
• David Emerson has been named foreign affairs minister by Prime Minister Stephen Harper. He succeeds Maxime Bernier, who resigned after leaving classified documents at a former girlfriend's house. Michael Fortier takes over international trade, Christian Paradis heads public works, and James Moore will be secretary of state for official languages, the Asia-Pacific gateway and the Vancouver Olympics.
• The Supreme Court of Canada will allow the world's largest leveraged buyout — the $51.2-billion (U.S.) sale of Bell Canada parent BCE Inc. The Ontario Teachers' Pension Plan heads the takeover bid that should lead to Bell intensifying efforts to compete more aggressively with cable TV operators.
Facts and figures
The value of the Canadian dollar edged closer to parity again at 99.26 cents U.S. on Friday, while the U.S. greenback returned $1.0075 Canadian, before bank exchanges fees.
The Bank of Canada's key interest rate is steady at 3 percent, and the prime lending rate is 4.75 percent.
Stock markets moved lower Friday, with the Toronto composite index at 14,297 points and the TSX Venture Exchange at 2,568 points.
Lotto 6-49: (Wednesday) 1, 23, 29, 34, 37, 45; bonus 8. (June 21) 6, 7, 14, 16, 17, 27; bonus 32. Super 7: (June 20) 7, 11, 26, 33, 34, 40, 46; bonus 25.
• Citing health risks, Ontario has banned smoking in vehicles where a child younger than 16 is a passenger. Smoking in workplaces and public areas, including bars and restaurants, is already illegal. Ontario joined Quebec in banning the sale and cosmetic use of lawn pesticides.
• Alberta Liberal Leader Kevin Taft, who spent four years trying to topple 37 years of Conservative rule in the province, will resign later this year. Taft said it's time to give someone else a chance to head the Official Opposition composed now of only nine Liberals. The governing Conservatives have 72 representatives in the Legislature.
• British Columbia has become a major source in the global drug trade, says Mountie Inspector Brian Cantera. Ecstasy, marijuana and cocaine produced in Canada are increasingly making their way around the world. Some drug labs also create an "environmental disaster," Cantera said, noting one was found next to the Fraser River and a conservation area.
• New Brunswick's government has dropped the idea of merging university and community colleges to form polytechnic institutions. Instead, the government wants "formal partnerships" to create Institutes of Applied Learning and Training.
Jim Fox can be reached at firstname.lastname@example.org.