Epsilon Adventures

As we sit parked in Canada’s Blackstrap Provincial Park, in Saskatchewan, CN, One of the things I’m pondering while traveling is the cost of goods and services. I don’t often go abroad and so our recent foray into Canada has me thinking about global economics and local advantages.

In a very great sense, Canada is very much like the US. We have seen that most goods and services, though they go by different names and naming conventions, are in effect the same or similar to what we experience in Ohio. In fact, many of the names of restaurants and shops are indeed American or Canadian brands so ingrained into US culture that it seems they should be (case in point, Tim Hortons). But in another sense, I was very interested in how the exchange rate may affect the actual costs of these goods and services. My first data point is the cost of diesel. My fill up from yesterday’s stop in Sasketchewan comprised of 77.514 liters of diesel at $1.459/L Canadian. It included what looks like a particular tax called GST in the cost which was $5.39 Can. The total cost was $113.09 Can. So let’s start to break that apart into an American cost. 77.514 L is approximately 20.47 Gals. According to my credit card, the $113.09 Can translated to $83.38 US. So we end up with an at-the-pump price of $4.07/Gal US. Now at home, I would be paying anywhere from $3.29 to $3.89 US for the same thing. While this is close, there could be a couple of reasons for this. First, GST may be an additional tax imposed, that doesn’t have a US equivalent, so, I’ll need to do some research on that. Second, even though I apparently got a favorable exchange rate (because at parity we would expect to pay $5.52/Gal US), it may be that these exchange rates are not based upon either the most recent data or prices in a particular location. Obviously the price I paid is still less than would be paid in California as opposed to what I’m used to in Ohio. So, without further research, I consider what I’m paying to be normal and not outrageous or a bargain. So, I’m content with this. Thirdly, there could be a hidden fee in the credit card transaction. There’s not supposed to be, but that doesn’t mean there isn’t — I must look over the final statement to see if any “international transaction fees” were applied. A fourth point is that diesel is just not as plentiful, yet demand is normal, in this area of the world. That would drive the price point up a little bit according to the rate of the imbalance. This of course says nothing about the diesel resource necessarily because it could be driven by honest scarcity or other factors in logistics to get it to the pump.

So, with one data point my conclusions are that the exchange rate is close to correct if we were to consider average costs across regional differences. But this is of course an inference and not a proof. I will soon consider a second data point in food goods, perhaps the cost of ground beef. I also wonder what the cost of diesel is going to be when we get to Chicken, AK?! So, this is to me very interesting, and I thought it might be to you as well? Let me know in the comments.