“Exaggerated margins”: gasoline retailers are lining their pockets in various regions

“Exaggerated margins”: gasoline retailers are lining their pockets in various regions

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

The motorists’ advocacy organization avoids using the word collusion. However, he says he is observing a “new phenomenon” in which the prices of gasoline sold in most regions of the province exceed those of the metropolitan area.

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“It is a phenomenon that we began to observe in April and that has not diminished since then,” laments CAA-Quebec spokesman David Marcille. The situation is even more surprising, since the metropolis imposes taxes on public transport that are not found elsewhere. Despite everything, prices in the region are usually higher than in the city.”

By region, CAA of course includes so-called remote regions like Côte-Nord 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 gas station

Photo Martin Chevalier

bromont gas station

In the absence of explanations, his representative says that only the “greatness of the service stations” and the “exaggerated surcharges” that they choose to impose on consumers can explain the discrepancies in prices observed at pumps, and that they remain despite the fall experienced by the price of a barrel of oil since then.

CAA estimates that the retail margin (which includes operating costs, 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, regional retailers have since the spring charged average markups of more than 15 or 16 cents per litre, well above what the CAA would consider reasonable.

“In Quebec, a city that is not without traffic during the summer, we even saw margins of 20 cents per liter, which seems to us [tout à fait] exaggerated,” his spokesman said.

Specialist in energy issues, Jean-Thomas Bernard, visiting professor at the Department of Economics at the University of Ottawa, also struggles to explain this phenomenon. One thing is for sure, he specifies, the conflict in Ukraine or any disruption of global logistics activities is not in question here in any way.

At all times and everywhere in America, he insists, gas prices have been higher in cities than in regions, mainly because of higher operating costs there.

“It’s a pretty unusual situation. Really, at this point, the Quebec case seems pretty unique to me compared to what we see in other parts of Canada.

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 service 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 intending to attack, through price reductions, that of their competitors.

The representative of the Association of Energy Distributors of Quebec, 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.

Reached in Ottawa, the Competition Bureau is unable to disclose the nature of its investigations and the complaints received. That said, “the fight against anti-competitive conduct in the gasoline sector is a priority,” added his spokesperson.

Since 2008, following investigations at Magog, Sherbrooke, Thetford Mines and Victoriaville, a total of 33 individuals and 12 companies have been found guilty of fixing gas prices in various markets and sentenced to $6 million in fines. Additionally, six individuals received prison sentences totaling 54 months and a total of 300 hours of community service.

retail margin1 average gasoline of the last 52 weekstwo

– Gaspesia: 15.8 cents

– Lower San Lorenzo: 15.2 cents

– North Coast: 14.1 cents

– Abitibi-Temiscamingue: 14.0 cents

– National-Capital: 13.4 cents

– Chaudiere-Appalaches: 12.4 cents

– Mauricio: 11.8 cents

– Outaouais: 10.5 cents

– Stretch: 10.3 cents

– Central Québec: 10.2 cents

-Laval: 9.8 cents

– Montreal: 9.6 cents

– Saguenay–Lac-Saint-Jean: 9.2 cents

-Monterégie: 9.0 cents

– Laurentians: 8.7 cents

– Lanaudiere: 8.0 cents

1 Includes consumption taxes.

2 Regular gasoline prices shown in the largest urban areas of each Québec region. Based on data from the Oil Price Information Service (OPIS).

Source: CAA-Quebec, from September 13, 2022

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