(Quebec) Energy Minister Pierre Fitzgibbon believes that the gas tax should be increased. He made this statement at the very end of a press conference where he announced the abolition of the floor price of fuel.
What there is to know
- Pierre Fitzgibbon believes that gasoline taxes should be increased, but that is not the intention of the Legault government.
- He intends to modify the law eliminating the floor price on gasoline, in order to promote competition.
- In four regions of Quebec, the market is “incoherent” and the profit margins of gasoline stores are too high, according to a study he commissioned.
“Lower fuel taxes? I think they would have to be mounted, if I did something,” said Mr. Fitzgibbon, before leaving the room where the press conference was held on Thursday. On social media, Mr. Fitzgibbon later clarified that “the government has no intention of increasing the gas tax.”
Although he followed in the footsteps of the federal government in increasing capital gains taxation, Prime Minister François Legault has always maintained that there was no question of further increasing taxes in Quebec. But this is not the first time that the superminister has thrown a spanner in the works.
Last summer, he declared that Quebec’s automobile fleet would have to be halved to achieve the energy transition and carbon neutrality objectives in 2050. Then, in an interview with The Montreal Journal, in March, he said that the growing popularity of large vehicles was a problem, that the decision not to impose a surcharge was “political”. “The vehicle is the greatest destroyer of values,” he said then.
The minister’s press secretary, Mathieu St-Amand, did not want to clarify the meaning of Mr. Fitzgibbon’s statement. He claims that this “was not the subject of the press conference”, and that it was a “joke”.
Mr. Fitzgibbon is not the only one to believe that the gas tax should be increased. The Union of Quebec Municipalities is asking the Legault government to index the tax to better finance public transportation, for example.
Pierre-Olivier Pineau, holder of the Chair of Energy Sector Management at HEC Montréal, praised the minister’s courage.
Pierre Fitzgibbon says several very true things about the vehicle fleet, the price of gasoline and he understands perfectly that our electricity prices make no sense. Perhaps that’s why he says he’s thinking about leaving politics after two terms: politicians who say the real things have it too hard!
Pierre-Olivier Pineau, professor at HEC Montréal
Abolition of the floor price
Furthermore, Mr. Fitzgibbon announced that he would repeal an article of the Petroleum Products Act, which imposes an “implicit floor price for gasoline stores”. This is a recommendation from an expert report that he commissioned after observing very high fuel prices in several regions of Quebec.
The report, which was sent to the Competition Bureau of Canada, demonstrates that “price trends in certain local markets are simply inconsistent with what we would like to see in a competitive gasoline market.” “Clearly, it concerns me,” he said.
We note, as we knew, a significant concentration of the market, and retail margins are high in certain regions. In the end, obviously, it is the consumers who pay. Margin prices in some Quebec markets increased significantly at the end of 2021 and have remained high since then.
Pierre Fitzgibbon, Minister of Economy, Innovation and Energy
The minister will also ask the authority to publish on a daily basis the increases and decreases in gasoline prices throughout Quebec. He hopes that these two actions will allow a drop in the price of gasoline.
Price gap between regions
Last September, the Legault government asked the Régie de l’énergie to observe the differences in gasoline prices in the Capitale-Nationale and Chaudière-Appalaches regions. In a notice dated October 18, the Energy Authority informed the minister of several findings. The estimated retail margins at gas stations in the Capitale-Nationale have been above the average for the rest of Quebec since 2021. They increased from 4.37 cents per liter in 2018 to nearly 15 cents per liter in 2023.
Mr. Fitzgibbon then asked the Competition Bureau of Canada to open an investigation. Then he tasked Robert Clark, affiliated professor at HEC Montréal, with proposing possible solutions. He finally identified four regions where competition leaves something to be desired in the sale of gasoline: “It is the Capitale-Nationale, Chaudière-Appalaches, the North Shore and the Gaspésie. These are the four regions, in Mr. Clark’s report, where we say: “Oops! It’s higher than elsewhere,” explains the minister.
In addition to abolishing the floor price and promoting transparency, Mr. Clark also recommended encouraging competition, a solution rejected by the minister because it is in contradiction with the energy transition. “I think that, in a context of energy transition, I have difficulty seeing how the ESSOR Program run by the Ministry of the Economy would provide subsidies to open essenciers. I don’t think I’m going to go there, I don’t think we’re going to go there at all,” Mr. Fitzgibbon said.