(Quebec) Energy Minister Pierre Fitzgibbon will abolish the floor price on gasoline to stimulate competition and reduce the price paid by motorists. He also said the fuel tax should be increased.
What there is to know
- Minister Pierre Fitzgibbon intends to modify the law to eliminate 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.
- Mr. Fitzgibbon believes that the fuel tax should be increased, but this is not the intention of the Legault government.
“The floor price was put in place at the time […] because we wanted to prevent consolidation and predators from lowering prices too much to eliminate competition. It happened anyway. This means that we are going to remove the floor price and perhaps competitors will lower prices even further. […] Quebecers, today, want to have the lowest possible prices,” the Minister of Energy said Thursday at a press conference.
Mr. Fitzgibbon therefore announced that he was going to 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 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,” said the minister.
PHOTO KAROLINE BOUCHER, CANADIAN PRESS ARCHIVES
The Minister of Energy, Pierre Fitzgibbon
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.
Peter Fitzgibbon
The minister will also ask the Régie de l’énergie to publish daily increases and decreases in gasoline prices throughout Quebec. He hopes that these two actions will allow a drop in the price of gasoline.
Different regions, different prices
Last September, the Legault government asked the Régie de l’énergie to observe price differences 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, a professor affiliated with HEC, to propose possible solutions. He finally cited 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.
PHOTO DOMINICK GRAVEL, THE PRESS
The price of gasoline reached 1.74 per liter on Thursday in Montreal.
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. “In a context of energy transition, I find it difficult to see how the ESSOR program run by the Ministry of the Economy would provide subsidies to open gasoline stores. I don’t think we’re going to go there at all,” Mr. Fitzgibbon said.
Furthermore, the minister stated at the very end of the press conference that he believes the gas tax should be increased.
One (another) paving stone in the pond
“Lower fuel taxes? I think I would have to show them if I did something,” said Mr. Fitzgibbon, before leaving the room.
On social media, Mr. Fitzgibbon subsequently clarified that “the government has no intention of increasing the gas tax.”
Although he followed in the footsteps of the federal government by increasing the taxation of capital gains, Prime Minister François Legault has nevertheless always affirmed 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 on this subject.
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 the growing popularity of large vehicles was a problem, that the decision not to impose a surcharge was “political”.
Mr. Fitzgibbon is not the only one who believes that the fuel 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,” he said.
Fuel tax in brief
The current fuel tax rate for gasoline is 19 cents per liter. In some regions, however, the tax is reduced. Those who fill up in regions that touch Ontario or New Brunswick benefit from a reduction of 8 cents per liter, which reduces the tax to a rate of 11 cents. In regions located less than 20 km from the US border, there is an even lower rate, ranging from 16 cents to 7 cents per liter, the closer you get to the United States. In the territory of the Regional Metropolitan Transport Authority (ARTM), the tax is subject to an increase bringing it to 22 cents. When gasoline is delivered to the territory of the administrative region of Gaspésie–Îles-de-la-Madeleine, a combination of increase and reduction brings it to 15 cents per liter. Reductions in the regular gasoline tax rate also apply to fuel sold in remote regions, as well as along the edges of these regions.
Calling all
In your opinion, should the gas tax be lowered or raised? For what ?
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