Pump prices too high; vigilance the watchword

    QUEBEC, Sept. 16 /CNW Telbec/ - Quebec motorists have every right to
question why the pump price of regular gasoline suddenly rose beyond
145 cents/litre (in some cases to 149 cents) just about everywhere in the
province on the afternoon of Friday, September 12, and has remained very high
since then.
    An increase in the pump price at that time was foreseeable because the
retail acquisition cost had risen. In CAA-Quebec's opinion, however, there is
simply no reasonable excuse that the industry could provide to justify last
Friday's sharp increase.
    Rather, CAA-Quebec considers that the increase came too quickly and has
since proven to be unjustified because, although there were some stock market
jitters as early as Friday, at that point there was no way of knowing whether
Hurricane Ike would have adverse impacts on the extraction and refining of
crude oil in the Gulf of Mexico near Texas.
    Gas station owners therefore banked on those negative expectations and
pocketed additional amounts by charging excessively high retail margins, and
it is motorists who have paid the price.
    For example, the realistic price of regular gasoline in Montreal this
past weekend was 141.6 cents/litre. A pump price of 149 cents/litre translates
into a retail margin of 12.6 cents/litre without the consumption taxes!
    In Québec City, over the weekend, the realistic price was
140.9 cents/litre. With a pump price of 145.4 cents/litre, the retail margin
was 10.4 cents/litre without the consumption taxes!
    We now know that Hurricane Ike, later downgraded to a tropical storm,
seems to have caused far less damage than originally feared. Currently, supply
costs are up, but that increase is not expected to last, as the price of
refined gasoline on NYMEX is already down sharply.
    In CAA-Quebec's opinion, the high pump prices we are seeing at the moment
are due in part to a very high refining margin (24.8 cents/litre as of
September 15, 2008, compared to 8.5 cents/litre on January 3, 2008) and an
excessively high retail margin.
    CAA-Quebec wishes to remind everyone that it is continuing to monitor the
situation very closely - including via daily public updates to its realistic
gasoline prices for Quebec's 17 administrative regions, posted on its
microsite Gasoline Watch: A realistic price according to CAA-Quebec. The
organization will not hesitate to condemn the persistence of unduly high pump
    It is worth noting that the per-barrel price of crude oil and the price
of refined gasoline usually fluctuate in the same way. It is not unusual,
however, for these two petroleum price indicators to move in opposite
directions, as is currently the case. Thus, while the value of a barrel of
crude has continued on its downward trend (a 30% drop since its peak in
mid-July), that of refined gasoline has been moving upward on fears of supply
disruption due to temporary closings of, and the risk of damage to, refineries
lying in the paths of the hurricanes that have struck the southern U.S. states
in recent days.

    CAA-Quebec, a not-for-profit organization founded in 1904, provides
automotive, travel, residential and financial services, benefits and
privileges to its approximately 950,000 members.

For further information:

For further information: Montreal: Roxanne Héroux, (514) 861-7111, ext.
3210, rheroux@caaquebec.com; Québec: Philippe St-Pierre, (418) 624-2424, ext.
2418, pstpierre@caaquebec.com

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