Gasoline prices have risen sharply in recent weeks, going from a 52-week average price of $ 1.07 per liter to $ 1.34 this week, a 25% increase at the pump.
Because of what ? From the sharp rise in the wholesale price of gasoline to the loading ramp at New York Harbor.
You read that correctly: Port of New York, not Port of Montreal.
Worse still: we also pay a premium over the New York price. A premium that varies from 5 to 10.5 cents per liter, depending on the daily mood of the oil companies serving Quebec.
Rightly, you are probably asking yourself: what is this story?
Zero influence of Alberta oil
The fact that Quebec oil refineries are increasingly sourcing Canadian oil from Alberta, which costs significantly less per barrel than that of American WTI or Brent from the North Sea, has no downward influence. on the price of gasoline at the pump.
Why ? Because the price of a liter of gasoline purchased in Quebec is determined on the basis of the cash price of gasoline set at the loading ramp at the port of New York, which price serves as a reference for suppliers who supply the wholesale market in Quebec. Northeastern United States. Final point.
Green light from the energy authority
The Régie de l’énergie du Québec has moreover “paid for” a study that justifies the merits of fixing the price of gasoline in Quebec from the price of gasoline determined at the port of New York. The study in question, The loading ramp price: a study of the refined petroleum products market in Quebec, was carried out by Patrick González, from the economics department at Laval University.
This report produced for the Régie de l’énergie du Québec, May 2020, has just been made public on the Régie de l’énergie website. Its cost? The contract was concluded with Laval University for the sum of $ 26,670.
“The conclusions of Mr. González are to the effect that if we want to ensure that consumers are not harmed in Quebec, the Régie should monitor the evolution of wholesale market prices in Montreal in comparison with those New York, because the wholesale market is North American and mainly influenced by New York ”, explains Me Véronique Dubois, secretary of the Régie and responsible for communications.
With the information gathered in this study, the Régie will complete its Frequently Asked Questions (FAQ) on petroleum products, which will be updated online shortly.
Disappearance of the refining margin
It is important to remember that since June 2018, the Régie de l’énergie du Québec no longer discloses the “estimated refining margin” that oil companies collect on gasoline sold in Quebec, nor the price of a barrel of crude oil.
This decision in 2018 was very well received by the interlocutors who revolve around the oil companies. The latter had their arms full of having to justify the increases in the price of gasoline each time the Quebec media, including The newspaper, reported surprising fluctuations in the “refining margin”.
That said, the Régie is now relying on the Université Laval study to justify its decision to eliminate the refining margin from the components of gasoline prices at the pump in Quebec.
“Mr. González’s analysis,” specifies the spokesperson for the Régie, “also led him to conclude that refining margins are not a determinant of retail gasoline prices. “
Wholesale price
In the components of the prices at the pump that it publishes daily, the Régie has been content since June 2018 to strictly publish the “minimum acquisition cost”, which corresponds to the minimum price at the loading ramp, that is say the lowest “wholesale price” among all those collected from refiners and wholesalers selling at the Montreal loading ramp.
The “wholesale market” for gasoline in Quebec, says González, is dominated by four players who each have their own terminal in Montreal: Valero, Suncor, Norcan and Shell.
The problem, I repeat: the famous “wholesale price” is determined according to that of the port of New York and not according to the real costs of the purchases of oil (Canadian and imported) and of the refining carried out here in Quebec, whether at the Suncor refinery in Montreal or at the Jean-Gaulin refinery in Valero, in Lévis.
The range of taxes
While the portion of the price of gasoline at the pump that goes into the coffers of oil companies (and wholesalers) comes down to a single component (minimum acquisition cost), the Régie de l’énergie shows no evidence of any retained with regard to the unveiling of the panoply of taxes on gasoline within the components of the prices at the pump.
And let me tell you that the oil companies appreciate this unveiling of taxes, a question of showing motorists that the price of gasoline in Quebec is heavily overtaxed. And that it is not their fault that gasoline in Quebec is very expensive.
