The rapid rise in the price of gasoline has caught motorists off guard and forced governments to find solutions to mitigate the impact. The leader of the Parti Québécois, Paul St-Pierre Plamondon, proposes to cap the price of gasoline at $1.60 per litre. Elsewhere, people have chosen to reduce taxes or opted for cash back at the pump, with mixed results.
Posted at 8:30 p.m.
“There is no magic method,” observes Simon Langlois-Bertrand, research associate at the Trottier Energy Institute.
In any case, reducing the price of gasoline does not help motorists change their habits and sends the wrong signal to the environment, but it may be necessary when a price increase affects such a large part of the population. for a period that we hope will be temporary, he believes.
“It’s the most brutal increase we’ve ever had,” says the researcher.
Alberta
The Alberta government was quick to respond to rising pump prices by reducing the provincial tax on a liter of gasoline by 13 cents on 1er april. The price per liter of regular gasoline fell to $1.56, but has since risen to around $1.71 in Calgary. Gasoline prices are the lowest in Canada in Alberta.
The problem with lowering gasoline taxes is that they have to go back to their previous level if prices at the pump go down.
And that is difficult, observes Simon Langlois-Bertrand, “if we put ourselves in the shoes of the politician who will decide to raise the tax on gasoline”.
Also, it is necessary to monitor whether the stakeholders in the distribution chain monopolize part of the tax reduction rather than passing it on entirely to consumers. “It is a frequent situation that makes me doubt the effectiveness of this measure. »
France
In France, the government has decided to give 18 euro cents per liter of gasoline when buying at the pump. Again, in a context of rising prices, there is a risk that part of the discount does not reach consumers.
The measure entered into force on 1er April and is due to end on July 31. It will probably be extended, the French government has indicated, but in another form.
The French Minister of Economy and Finance, Bruno Le Maire, has himself acknowledged the inequity of the cashback, which benefits motorists with high incomes as much as those who need it most and who must use a car for their work.
Simon Langlois-Bertrand explains that targeted measures are more complex to implement and that governments, in France as elsewhere, have had to act urgently.
The other disadvantage of cashback is its high cost, estimated in France at between 3 and 4 billion euros (between 4 and 5.4 billion CAN).
Quebec
The prohibitive cost is also the major problem with PQ leader Paul St-Pierre Plamondon’s suggestion to cap the price per liter at $1.60. To do so, the oil companies would have to be compensated for the difference between the current price, which is currently $2.15, and $1.60. This difference of $0.55 applied to annual sales of 10 billion liters of gasoline in Quebec would result, for example, in a bill of $5 billion. “That’s a lot of money,” says Simon Langlois-Bertrand.
Making the oil companies pay with a tax on the excess profits they make is easier said than done, according to Mr. Langlois-Bertrand. “In fact, it’s very complicated because these are companies that have the means to avoid it. »
The Quebec government chose in its last budget to pay consumers $500 directly for the price increases of several products, including gasoline. It may be a better option, says the researcher, provided the measure is better targeted. “The reproach made to him is that too many people are entitled to it. To be effective, cash back must be paid to those who need it. »
When we compare…
Some countries are less concerned about the impact of soaring fuel costs because they already control pump prices and keep them low for various reasons, including to stimulate economic development. This is the case in Venezuela, where prices at the pump are the lowest on the planet, at around 3 cents per litre.
Those who can afford such a policy are usually oil-producing countries, such as Venezuela, Libya and Syria, which export at the international price and thus finance local consumption.
At the other end of the spectrum, the countries that pay the most for gasoline tend to be those that impose the highest taxes, such as Norway, where you have to pay more than $3 a liter to fill up. This high price has helped make Norway an electric car paradise even though, like Canada, it is an oil-producing country.
“In North America, studies have long proven that it would take very high prices, much higher than current prices and for a very long time, to bring about changes in behavior,” says Simon Langlois-Bertrand.