Gasoline prices: retailers go to war, consumers benefit

In recent days, gas stations have been taking smaller retail margins than usual, thereby offering consumers a little respite as the holiday season approaches… except in Montreal and Laval.

“With less demand, retailers are fighting a war with each other,” says gas price analyst Dan McTeague.

As a result, motorists are paying less for a liter of gasoline today than at the same time last year, even if the cost of acquisition and transport has remained approximately the same.

For example, the average price at the pump is 152.9 cents this week in the Quebec region, where retailers are keeping a margin of just over 10 cents per liter. A year ago today, the price was 160.7 cents, with margins of 17.4 cents. This means that retail margins have fallen by more than 41%.

Gas stations in Saguenay maintain very slim retail margins on gasoline sold at the pump.

Photo Agency QMI Roger Gagnon

Elsewhere in Quebec, the difference is even greater. In Estrie, margins were 8.7 cents at the start of the week, while they were 16.5 cents two weeks before Christmas in 2023. And in Saguenay–Lac-Saint-Jean, gas stations do not today only about 4 cents per liter remains, compared to almost 12 cents last year!

“With margins like that, they sell at a loss,” says Dan McTeague. “They can do this because they have help from the refineries which give them back part of their profits to allow them to be competitive.”

“It must be remembered that retailers pay for customer loyalty programs themselves. The discounts of 6-7 cents per liter that we receive at the grocery store come from retailers, not refineries. This means that several service stations simply could not remain in operation without being helped by the refineries,” he adds.

The Montreal exception

Data on the price of gasoline compiled by the Régie de l’énergie shows that retailers almost everywhere in Quebec have decided to tighten their belts, with the exception of Montreal and Laval, where gas stations service are even more demanding than last year.

In Montreal, the price at the pump is about 3 cents higher than in December 2023, which is largely explained by a 2 cent increase in retail margins. In Laval, margins increased by around 1.4 cents.

A gas station in Laval, Tuesday December 10, 2024. – SHELL boul. Laval Laval, Quebec, Canada. Tuesday, December 10, 2024 PHOTO: MARTIN ALARIE / JOURNAL DE MONTREAL / AGENCE QMI

MARTIN ALARIE / JOURNAL DE MONTREAL

What about during the holidays?

Furthermore, motorists should continue to pay approximately the same price for their fuel even during the holiday season, according to analyst McTeague.

“I don’t expect it to go back up,” he said.

The gas price expert, however, says he is concerned about the weakness of the Canadian dollar, which has the effect of making us pay much more for fuel.

“If our dollar were equal to the American dollar, we would pay 25 cents less for each liter of gasoline,” he observes. “If the drop in the interest rate is too significant on Wednesday, it risks causing the Canadian dollar to fall further, and that could have an impact on the price at the pump.”