MONTREAL – One industry analyst has a simple explanation for the higher gas prices that jolted motorists Wednesday in major Canadian centres: “greed.”
The shock at the gas pumps was particularly acute in Montreal, where prices soared by as much as 13 cents a litre. The price of regular in the Montreal area was set at just under $1.53 a litre, an increase of almost 20 cents since the start of summer.
Gasoline prices across southern and eastern Ontario also rose by about 3.4 cents, according to the website tomorrowsgaspricestoday.com. That put the price of regular in the greater Toronto area at just under $1.37 a litre, and $1.34 in the Ottawa area. In the greater Vancouver area, prices ranged from $1.36 in Burnaby to $1.42 in Richmond, with smaller fluctuation in recent days.
Roger McKnight of En-Pro International says he’s checked over a number of the usual factors — like supply and demand, refinery problems and inventories in the United States — all of which dictate prices in Canada.
“There’s no reason for (gas prices) to be going up,” he said in an interview.
McKnight, an independent industry analyst whose company is based in Oshawa, Ont., says prices should actually have gone down because the Canadian dollar has increased in value.
“When the Canadian dollar goes up in value, your prices should actually be dropping, but they actually went up,” he said.
“So I’m going to have to use the word, ‘greed,’ insofar as the oil companies are concerned.
He said that when it comes to refining capacity, Canada suffers from a lack of competition because it has only 14 refineries. The U.S., with just over nine times the population size, has more than 10 times the number of refineries — 144 of them — according to the U.S. Energy Information Administration.
The petroleum analyst has a suggestion for people with gas guzzlers who grumble about prices: switch to smaller, more fuel-efficient vehicles.
“I think it’s probably in the range of 25 to 30 per cent more efficient,” he said.
McKnight points to the U.S. where he says gasoline demand has been down for three years in a row because of the tendency toward smaller cars.
He also said Montreal motorists pay more when compared to Toronto drivers because of the taxes that are slapped on after the gas is shipped to market.
“The wholesale, or what we call the rack price, in Toronto and Montreal are almost exactly the same at about 90.2 cents,” McKnight noted.
Added taxes have also put an extra squeeze on the wallets of motorists in Vancouver. For Vancouverites, the price at the pump includes an environmental tax, a carbon tax and a mass transit tax.
That’s prompted motorists to travel to the nearby U.S. border town of Point Roberts, Wash., where gas can be as cheap as $1 per litre. To accommodate their Canadian clientele, local gas stations have even switched to providing measurements in litres instead of the usual U.S. gallon.
“What’s happening in Montreal and Vancouver is they’re having an Olympic race to see who has the most ridiculous tax structures in the country,” McKnight said. “I think Montreal is going to win.”
Another analyst who provides services to the industry offers a more generous interpretation for the price hikes. Jason Parent is with Kent Marketing of London, Ont., which offers data and consulting services to the petroleum sector.
He says there are good reasons for the increase in gas prices — and “sometimes you have dig and scratch to find them.”
Parent says wholesale prices have been coming up over the last week and significantly so in the last few days, with several factors coming into play.
“One (factor) is the refineries that were shut down because of the hurricane in the southern (United) States,” he said in an interview.
“They are back on line but that put a huge crimp in the supply which flows all the way up the eastern seaboard in the U.S. and into Canada.”
Parent says there have also been refinery issues in the Detroit and Chicago areas where there were planned shutdowns for various reasons, including maintenance.
“That’s what’s driven prices up recently — despite the fact that the price of crude has been relatively steady,” he said.
Parent agrees with McKnight that Montreal is a unique market where gas prices go up quite often.
He explains that retailers are forced to introduce a larger increase in gas prices in order to get a more sustainable profit margin.
“It’s the way the competitive dynamic works in that area where prices go up significantly (and) they go down significantly,” he said.
“You’ll likely see prices come down quite a bit in the next little while and that just seems to be the way the Montreal market works.”
None of that offered much consolation to motorists who were filling their tanks in downtown Montreal on Wednesday.
“We’re being whacked,” said Jared Lang, who had to pay $1.51 a litre to fill up.
“I don’t even want to fill up my car. I put in maybe $10 to $15 at a time, hoping it goes down and I live with it.”
Lang recalled that when he started driving more than 20 years ago, he paid about 40 cents a litre. He quipped: “It’s not like the minimum wage has gone up five times since then.”
He also said that he tries not to drive as much as possible in order to save money.
Lindsay, who would only give her first name, also said she doesn’t drive as much as she used to.
“There’s politics around it, there’s greed but personally all I can do is try and save myself,” she said as she tanked up her subcompact fuel-efficient Honda Fit. “I drive a car which saves on gas, I bought it specifically for that and I don’t drive when I don’t need to.”
Her last vehicle was a Honda Civic. She said her choice in cars wasn’t just about saving money: “It’s about the environment as well.”
Gas price watcher Dan McTeague says he can’t see a reason for the increase, other than a money grab, and his website calls the latest hike “absurd and unjustified.”
The increase prompted many drivers in the Toronto area to fill up before midnight, causing lineups of up to 30 vehicles long at some service stations.
It was a similar situation in Montreal where motorists also waited to fill up — only in that city, stations were already selling gas anywhere from $1.37 to $1.43 a litre.