Gasoline: regions are paying too much

Essence: regions are paying too much

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Gas station owners in most regions of Quebec, outside the greater Montreal area, are filling their pockets with margins that CAA-Quebec no longer hesitates to describe as '“exaggerated”.

The motorists' defense organization avoids using the word collusion. Nevertheless, he says he observes a “new phenomenon” whereby the prices of gasoline sold in most regions of the province now exceed those of the metropolitan area.

“It is a phenomenon that we began to observe in April, and which has not been reduced since, deplores the spokesperson for CAA-Quebec, David Marcille. The situation is all the more surprising, as the metropolis imposes taxes on public transport that are not found elsewhere. Despite everything, prices in the regions are often higher than in the city.”

By region, CAA of course includes the so-called remote regions such as the North Shore and Abitibi for example; but also closer regions, such as Estrie, Mauricie and Quebec. Everywhere, the observation is the same: the price at the pump now tends to exceed that of Montreal.

Bromont service station

Inflated margins

Short of an explanation, his representative says that only the “greatness of service stations” and the “exaggerated mark-ups” they choose to impose on consumers can explain the price discrepancies at the pump observed, and which remain despite the fall experienced by the price of a barrel of oil since.

CAA estimates that the retail margin (which includes operating costs – from 4.4 to 5.5 cents per liter – set by the Régie de l'énergie) should normally be around 9 cents per liter on average. 

However, according to his observations, since the spring regional retailers have been applying average margins of more than 15 or 16 cents per litre, well beyond what CAA would deem reasonable. 

“In Quebec, a city that does not lack traffic during the summer, we even saw margins of 20 cents per liter, which seems to us [completely] exaggerated”, says its spokesperson.

A specialist in energy issues, the visiting professor of the Department of Economics at the University of Ottawa, Jean-Thomas Bernard, is also struggling to explain this phenomenon. One thing is certain, he specifies, the conflict in Ukraine or any disruption of global logistics activities are in no way at issue here.

Any time and everywhere in America, he insists , gasoline prices were higher in the city than in the regions, due in particular to higher operating costs there.

Unique case in the country

“This is quite an unusual situation. Really, on this point, the case of Quebec seems to me quite unique compared to what we see elsewhere in Canada.”

Up until now, Quebec has always refused to regulate the price of gasoline, believing that free competition between retailers was enough to protect motorists from unreasonable increases at gas stations.

The problem, says Mr. Marcille of CAA-Quebec, is that not all regions benefit from the “healthy competition” that we would like. The latter evokes, for example, the case of regions where retailers would be satisfied with their market share, without seeking to attack, by price reductions, that of their competitors. 

The representative of the Quebec Energy Distributors Association, Sonia Marcotte, believes that the increase in the minimum wage and the increase in fees charged by credit card companies could justify this attempt by retailers to increase their margins. 

Whistleblower encouraged

Joined in Ottawa, the Competition Bureau cannot disclose the nature of its investigations and complaints received. That said, “combating anti-competitive behavior in the gasoline sector is a priority,” added its spokesperson.

Since 2008, following an investigation conducted in Magog, Sherbrooke, Thetford Mines and Victoriaville, a total of 33 individuals and 12 companies have been found guilty of fixing gas prices in several markets and have been sentenced $6 million in fines. In addition, six people received prison sentences totaling 54 months and a total of 300 hours of community service.

Retail Margin1 average on gasoline for the last 52 weeks2

  • Gaspé: 15.8 cents
  • Bas-Saint-Laurent: 15.2 cents
  • North Shore: 14.1 cents
  • Abitibi-Témiscamingue: 14.0 cents
  • Capitale-Nationale: 13.4 cents
  • Chaudière-Appalaches: 12.4 cents
  • Mauricie: 11.8 cents
  • Outaouais: 10.5 cents
  • Estrie: 10.3 cents
  • Central Quebec: 10.2 cents
  • Laval: 9.8 cents
  • Montreal: 9.6 cents
  • Saguenay–Lac-Saint-Jean: 9.2 cents
  • Montérégie: 9.0 cents
  • Laurentians: 8.7 cents
  • Lanaudière: 8.0 cents

1 Including consumption taxes.

2 Regular gasoline prices displayed in the largest urban areas of each region of Quebec. Based on data from Oil Price Information Service (OPIS). Source: CAA-Quebec, dated September 13, 2022

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