QUEBEC CITY, March 7, 2016 /CNW Telbec/ - In 2015, Quebec motorists overall enjoyed pump prices that were on average 16% lower than in 2014, but drivers in Greater Montreal clearly paid the price of a worrisome industry trend: multiple unjustified price hikes on Fridays.
Montreal: a special case
During the year, 11 out of 17 increases noted on a Friday in Montreal were excessive and without foundation, which corresponds to 65% of cases. This is unprecedented in the years since 2006, when CAA-Quebec began publishing its summary analyses of gasoline price trends. In addition, the average retail margin in the city increased by 7% in 2015 versus 2014, whereas it was down by 20% and 18% in Quebec City and Sherbrooke respectively. Moreover, the retail margin decreased or remained stable in 10 out of Quebec's 17 regions during the year.
On numerous occasions in Montreal, industry players clearly failed to respect fluctuations in the petroleum price indicators in setting their pump prices. As a result, motorists were penalized. In CAA-Quebec's opinion, the industry must review its strategy in Quebec's largest city.
The situation was completely different in Quebec City, where the average retail margin decreased by 20%. According to CAA-Quebec, increased competition in the capital is the reason for the more affordable prices. In Sherbrooke, although the average retail margin was down by 18% during the year, the situation is different: there are still extended periods of pump price stability in that region, and this is generally to the disadvantage of motorists.
All the same, a welcome respite
In 2015, the lower average retail margin and generally lower prices led to a respite for motorists. The owner of a 2014 Honda Civic who drove 20,000 km saved more than $300 at the pump in 2015 compared with 2014. Over the same distance, the driver of a 2014 Dodge Caravan paid some $500 less, and for a Chevrolet Silverado, the fuel savings were more than $550.
Crude oil and pump prices
The price of Brent crude oil, the type used in Quebec refineries, plummeted by nearly 50% in 2015; the average price per barrel was $52. The refining margin, however, was in the neighbourhood of 20 cents/litre, an increase of 67% compared with 2014. Though significant, that increase is directly related to the weakened Canadian dollar. Currency exchange value is a crucial factor in the competitiveness of refineries, which deal in products that are traded in U.S. dollars.
Many Quebecers wonder why the price they pay at the pump has not decreased proportionally with the fall in crude oil prices. There are four main reasons why the cost of refined gasoline has not declined at the same rate as that of crude oil:
- the higher refining margin;
- the coming into effect of the second phase of the Quebec carbon market;
- the sharp decline in the value of the Canadian dollar compared to the U.S. currency; and
- the tax rate on a litre of gasoline (41% in Montreal).
The net result is that Quebec motorists have not seen the same price decreases as have, for example, Americans. At the beginning of this week, in the U.S., the average price of a gallon of regular gasoline was $1.749 US, which is equivalent to $0.62 Cdn per litre.
The year by the numbers (cents/litre)
- Average price of a litre of gasoline in Montreal: 116.8
- Average price of a litre of gasoline in Quebec City: 109.9
- Average price of a litre of gasoline in Sherbrooke: 112.6
- Average retail margin in Montreal: 7.6
- Average retail margin in Quebec City: 4.4
- Average retail margin in Sherbrooke: 6.2
- Average retail margin in the province of Quebec: 6.8
The year 2015 saw significant decreases in the petroleum price indicators, i.e., those for crude oil and refined gasoline. As a result, motorists saved hundreds of dollars compared with 2014, when the average pump price in Quebec was 134.2 cents/litre. In CAA‑Quebec's opinion, however, the industry is continuing to apply strategies that are highly unfavourable to motorists, namely, substantial and unjustified increases as well as periods of excessively stable pump prices.
Detailed tables related to this summary report can be found at caaquebec.com.
CAA-Quebec, a not-for-profit organization, provides all of its members with peace of mind by offering them high-quality automotive, travel, residential and insurance benefits, products and services.
For further information: Montreal, Anne-Sophie Hamel, Communications Advisor and Spokesperson, 514 861-7111, ext. 5478, Cell.: 514 717-4040, [email protected]; Quebec, Rébecca Salesse, Communications Advisor, 418 624-2424, ext. 6011, Cell. : 418 563-4590, [email protected]