Troubled shipping costs.

So I have a problem with shipping costs, mainly shipping costs for a small parcel to places in Canada (which makes no sense as I live in Canada). Anyways here is what I have noticed. Within Ontario (for now it seems) shipping costs have been fairly normal at around $6. Yet my problem occurs when faced with the shipping costs outside of Ontario (but still within Canada). Why must shipping costs to BC be $11 for regular parcel post? It's a really small package too (one that would cost around $6 CAD within Ontario, $5 USD to the United States, and $7 USD to send it internationally).

Why is it cheaper to ship a parcel outside of Canada than within? It really makes no sense to me. So now I feel stuck. I need to change the shipping costs for Canada in my etsy store so that I don't lose money, but I still want to keep shipping costs low because let's face it, no one likes to pay extra for the cost of shipping!

So what should I do?
Should I set the price at $10 USD (~$11 CAD) for all of Canada? or should I find some sort of middle ground and charge $8 USD?

Both have their pros and cons. If I choose the first option, then I could always refund the extra shipping costs to the buyer, but the initial high cost that would be listed may turn away potential buyers and decrease sales (and I am striving to increase my sales).

If I choose the second option, then I might be losing money still because I would have to cover any extra costs.

So now I feel stuck! It doesn't help that I am half awake typing this at almost 4:30 AM. I guess I will decide after some sleep. Any suggestions would be greatly appreciated.