QUEBEC, Feb. 4 /CNW Telbec/ - Looking back at gasoline prices across
Quebec during 2010, the year was highlighted by a marked drop in retail
margins in several regions, yet the opposite situation prevailed in
Montreal and Quebec City, where margins remained equal to or greater
than the provincial average of 5.1 cents/litre. CAA-Quebec considers
this situation to be abnormal, among other reasons because it shows
that the two largest markets in the province are not reflecting the law
of supply and demand.
Presented below, for the fourth year in a row, are the main observations
stemming from CAA-Quebec's annual review of gas price fluctuations.
Some regions more privileged than others? CAA-Quebec's observations highlight certain anomalies in some
locations, for example in Saguenay-Lac-Saint-Jean, where the average
retail margin decreased to 4.6 cents/litre in 2010 from 7.3 cents/litre
in 2009 - a drop of 37%. "CAA-Quebec knows full well that in regions
with lower sales volumes and higher operating costs, there should
necessarily be a higher retail margin, so we should be asking questions
about the magnitude of that decrease," says Sophie Gagnon, the
organization's Senior Director of Public and Government Relations. In
the Mauricie region, although the drop was less pronounced, the margin
was 3 cents/litre in 2010, whereas it had stood at 4.2 cents/litre in
2009 (a 29% decrease). In Estrie, the margin shrank by approximately
12%, to 3.7 cents/litre in 2010. In these two regions as well, there is
reason to question the market logic, because in 2006 and previous
years, their retail margins were comparable to that recorded in Quebec
Elsewhere, the regions of Centre-du-Québec (2.2 cents/litre),
Laurentides (3.3 cents/litre) and Lanaudière (4.2 cents/litre) retained
their reputation as the markets where the retail margin is
traditionally much slimmer than the provincial average, owing to higher
sales volumes and more intense competition - proof that it is possible,
given these conditions, to maintain lower margins.
Lower margins, of course, refer to pump prices that are more reflective
of market indicators, to the advantage of consumers.
Meanwhile, in Montreal and Quebec City… If it is possible for a market to thrive with lower retail margins, why
is that logic contradicted in Quebec City and Montreal? In Quebec City,
the retail margin averaged 5.7 cents/litre in 2010, while in Montreal,
the average was 5 cents/litre. In other words, retailers and
independents in the province's two largest markets are helping
themselves to higher retail margins as compared with several less
populous regions of Quebec, whereas motorists should, on the contrary,
expect to benefit from the effects of the stronger competition that
typifies large markets.
"Although the margin dropped very slightly in Montreal compared with
2009, it remains inexplicably high compared to certain other markets in
Quebec," Ms. Gagnon emphasizes. "And the picture in Quebec City isn't
much rosier - far from it, in fact, since the retail margin actually
increased slightly there. Something clearly needs to be done about the
situation, because as things stand now, motorists in Quebec City and
Montreal are getting the short end of the stick."
Government action needed. Given the fact that retail margins observed in Quebec's various regions
are completely inconsistent with the basic principles of the gasoline
market, CAA-Quebec considers it appropriate for the Government of
Quebec to take action on the issue, so as to conduct more in-depth
analysis of the situation and hear explanations from the industry. It
is high time clear answers were given.
A 40-day-long example … It is worth recalling the situation that prevailed immediately before
the Holiday period, when retailers in the Quebec City region maintained
an average retail margin of 8 cents/litre - 3 cents/litre greater than
the provincial average - for more than 40 days. When CAA-Quebec spoke
out against the situation, industry representatives were unable to
provide any credible explanation. In the opinion of the Canadian
Petroleum Products Institute (CPPI), CAA-Quebec's analysis did not
cover a sufficiently long period of time, and when considered on an
annual basis, retailers' margins compared well with those of their
counterparts in other regions. "Where is this alleged comparability?
Ask motorists in Quebec City if they think 40 days is too short a
period when they are paying, on average, 3 cents too much for every
litre of gasoline," Ms. Gagnon counters.
CAA-Quebec believes that in certain markets, the industry is quite
simply disregarding the need for retailers to more closely follow
fluctuations in the daily cost-of-acquisition indicator and set a price
that properly reflects market movements - and to set that price daily.
Some statistics based on CAA-Quebec's observations
Pump price vs. realistic price. In Montreal, the pump price was higher than the realistic price
calculated daily by CAA-Quebec on 106 out of 248 business days; i.e.,
43% of the time. In Quebec City, the pump price was higher on 127 days,
or 51% of the time, while in Sherbrooke, a higher pump price prevailed
on 143.5 out of 248 business days (58% of the time). These are
interesting figures that remind consumers of the usefulness of
CAA-Quebec's Gasoline Watch tool, which they can consult to find out the daily realistic price in
Pump price. In 2010, the average price of a litre of regular gasoline stood at
108.3 cents/litre in Montreal, compared with 98.8 cents/litre in 2009.
In Quebec City, it was 106.6 cents/litre in 2010 vs. 97.3 cents/litre
the previous year. In Sherbrooke, the average price was
105.6 cents/litre, whereas it had been 97 cents/litre in 2009.
Highest price vs. lowest price. In Montreal, the highest observed pump price was 121.9 cents/litre, on
December 23. In Quebec City, the priced peaked at 119.4 cents/litre
between December 2 and 6, while in Sherbrooke, it reached
121.4 cents/litre in late December. The lowest recorded pump price of
the year was 97.4 cents/litre in both Montreal and Quebec City, and
99.4 cents/litre in Sherbrooke.
Refining margin. The average refining margin was 10.9 cents/litre in 2010. Unlike in
2009, there were no major swings in the refining margin: its low for
the year was on August 18 (7.2 cents/litre) while its peak occurred on
May 17 (16.1 cents/litre).
Periods of stability. In Quebec City, the year was marked by several brief episodes of stable
pump prices. The longest of these lasted 22 business days: from
October 6 to November 5 inclusively. During that time, the price per
litre of regular gasoline stood firm at 108.4 cents/litre, while the
retail margin varied between 6.8 and 3.5 cents/litre. In Sherbrooke, a litre of regular gas sold for 109.4 cents/litre for 54
consecutive business days (October 8 to December 23), during which time
the retail margin varied between 7.3 cents/litre and -1 cent/litre.
"Generally speaking, one can sum up the situation in 2010 simply by
saying that in several regions, the pump price of gasoline does not
reflect either the logic of supply and demand or market fluctuations,"
Ms. Gagnon concludes.
CAA-Quebec's Gasoline Watch tool can be consulted on the www.caaquebec.com. It is also available as an application for the iPhone, iPod touch and
CAA-Quebec, a not-for-profit organization founded in 1904, provides
automotive, travel, residential and financial services and privileges
to its 1.1 million members.
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