Montreal Gas Prices – Conspiracy, Collusion or Coincidence?

Montreal Gas Prices – Most drivers who fill up their tanks in the Montreal area (and Laval for that matter) have been crying out for years that there has been collusion going on between the oil and gas companies – a price fixing conspiracy digging into their pockets deeply. Nobody seems able to outright prove it, but one would be hard pressed to believe that it isn’t going on.

Prices inexplicably rise sharply on a regular basis – usually overnight between Wednesday evening and Thursday morning just in time for the weekend, then slowly go back down during the week. The most recent being a 15 cent per litre increase – and almost every gas station was showing the exact same price and they claim it was just ‘coincidence’. There is no other city in Canada who experiences the same thing.

Vancouver might have just reached the highest prices in North American history, when on Monday April 30th gas prices in the Lower Mainland rose on average to $1.619 per litre, but there is an explanation for it. Their prices are directly affected by oil price changes – and in this case it was due to two refineries in Washington State going through maintenance and therefore slowing down production. Consumers could at least see it coming, up or down – unlike here in Montreal, where it’s always a mystery of sorts.

CAA-Quebec has been questioning the way prices are set in Montreal for years now. In 2016 they published an analysis of gas prices and found it ‘abnormal and questionable that the Montreal market maintains margins that are higher than in some other, smaller markets in Quebec’ and that ‘prices tended to fluctuate in unison across the metropolitan area’. They felt the market should be more competitive, especially in the province’s largest city.

So why can’t something be done about it? Contrary to popular belief, lawsuits have been filed in Quebec – and some of them have actually been won. After a lengthy 10 year battle, residents in the Eastern Townships sought damages against Shell, Esso, Petro-Canada and Irving Oil – charged with criminal price fixing by the Competition Bureau of Canada. It resulted in a $17 million out-of-court settlement in May of 2017. The bureau said the gas stations had called each other to agree on prices.

In another investigation, the Competition Bureau wiretapped over 200,000 communications between a gas company representative, who would first contact employees of a major gas station chain to agree on a price and when to implement it, followed by contacting other gas stations – who would then agree to do the same. Afterwards, the gas stations would contact each other to make sure they all increased their prices as arranged. No ‘coincidence’ there. A class-action lawsuit alleging the Quebec oil and gas companies were engaged in price fixing is still before the Supreme Courts.

So why can’t price fixing be stopped for once and for always?

According to the Competition Bureau of Canada, they are responsible for ‘the administration of the Competition Act, which includes provisions against price-fixing, price maintenance and abusive behaviour by a dominant firm, among others’ – and it all applies to gasoline and ‘other petroleum products’ markets. But the Act does not provide the Bureau with the power to regulate prices.

It appears hopeless when the federal government ‘does not have the constitutional power to enact legislation to regulate the retail price of gasoline except in a national emergency’. The constitutional power to regulate retail gasoline prices rests with the provincial governments.

And why hasn’t the Quebec government done anything about it? Perhaps it has to do with a lack of incentive for the province. Montrealers pay close to $3 billion in gas taxes per year, more than any other city in Canada. They pay a carbon tax, federal excise tax, provincial fuel tax and a public transit tax – and then the GST and QST is taxed on top of that. It adds up to over $900 per year for drivers. That’s a significant amount of money filling government coffers – and more than a few full tanks worth for drivers.

Also, as society moves towards renewable, cleaner energy and with dependence on fossil fuel on its way out – less revenue from taxes would take its toll on the government. They would be hard-pressed to find other ways to balance their budgets. The aforementioned lack of incentives to regulate gas prices would have them looking elsewhere to replace the loss.
It is not far-fetched to think they would eventually find a way to tax electric cars to the same degree – even though the Quebec government has presently offered discounts of up to $8,000 for the purchase of an electric vehicle. Perhaps it is why consumers need to take action now – and have their voices heard loud and strong. Canada’s Competition Bureau should up their ante and have more power to control what is going on. And the Quebec government needs to stop turning a blind-eye to the situation and work towards regulating what has been proven in the courts to be criminal price fixing.

What do you think? Conspiracy, collusion… or coincidence? Beside stopping to use cars completely and leaving the cash registers at the gas stations on empty instead – how can consumers make the province take action?

Bonnie Wurst –
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