Montreal Gas Price Jump A Taste Of Things To Come: Experts

First Posted: 02/28/2012 3:13 pm Updated: 03/ 2/2012 11:01 am

Gas Pump

Energy industry experts are warning that the 14-cent per litre spike in gasoline prices in Montreal on Tuesday is just a taste of the high fuel costs Canadians can expect in the coming months.

The average pump price in Montreal was $1.44 a litre, compared with $1.30 a day earlier, according to price-tracking website Gasbuddy.com. By contrast, the Canadian average only rose a penny to $1.28.

"I'm expecting to see the national average breaking all-time highs. We'll likely see $1.45 to $1.50 this summer," said Jason Toews, co-founder of Gasbuddy.

Roger McKnight, senior petroleum adviser at En-Pro International, agreed more pain is in store for motorists.

"I'm calling for gasoline prices at the end of April to be 12 to 15 per cent higher than they are today, right across the country," he said.

The potential national unity implications of higher oil prices have surfaced in recent days.

While some regions celebrate the benefits of higher oil prices, there is resentment in other parts of Canada about the impact of a high "petro-dollar."

Ontario Premier Dalton McGuinty has said booming oilsands development is pushing up the Canadian dollar, making it harder for the manufacturers in his province to export goods. His Alberta counterpart, Alison Redford, has shot back, calling that approach "simplistic."

On Tuesday, that same pressure was mounting within Quebec. With a provincial election looming as early as this spring, high oil prices appeared as an irresistible attack theme for the province's separatist opposition party.

The pro-Canada government of Jean Charest found itself under attack during a six-minute exchange in the legislature, as the Parti Quebecois repeatedly urged it to take action to reduce prices.

One PQ legislator asked: "Is the Liberal government on the side of the big oil companies, or on the side of Quebecers?"

Also, a speechwriter to PQ Leader Pauline Marois took to Twitter to decry what he called the $24 billion negative impact of Canada's "petro-dollar" on Quebec's economy, notably in reduced exports. He cited the government's silence as proof the Charest government is beholden to the energy industry.

Alberta enjoyed the lowest gas prices in the country on Tuesday, with Edmonton posting an average of just under $1.10 and Calgary averaging $1.12.

Montrealers, meanwhile, were already reacting to the burn.

A frustrated Jade Stevenson spat out a profane response when asked about the increase.

"I can't carry my kids to school on my back, I've got to use my vehicle to get to work, so I'm pretty well stuck," Stevenson said as he filled up his massive Lincoln pickup truck at a gas station near the Bell Centre.

Stevenson's fill-up cost him $1.42 per litre, forcing him to use his credit card twice on the same visit. The pump only accepted a maximum payment of $100 on each swipe and his total came to more than $132.

"I don't know what can be done," he said. "I just have to live with it for now and hope that the government, or somebody, steps up to the plate and does something about it."

While Stevenson grappled with the feeling of helplessness, a pump attendant at a full-service station around the corner battled boredom.

Bilal Aysh tapped away on a laptop in a cramped booth along one of Montreal's busiest boulevards. In one 10-minute span, he didn't serve a single customer.

"Today is not normal," said Aysh. "It's very quiet because of the price."

Gas prices generally rise as the weather warms up and motorists take to the road, bumping up demand.

The increase Toews and McKnight foresee would break the record national average above $1.40 hit during the summer of 2008 when crude oil — the main ingredient in gasoline — rose to US$147 a barrel.

Toews said crude oil is part of the equation this time around, with tensions in the Middle East making speculators nervous.

"That will definitely cause some big problems with gas prices," he said.

North American benchmark crude for April delivery settled below US$107 on the New York Mercantile Exchange on Tuesday. But North Sea Brent crude, which many refineries in the eastern part of the continent use to make fuel, has been trading much higher, settling at US$121.55 a barrel.

McKnight sees the higher gas prices less as a function of higher crude and more as a result of recent woes in the refining industry.

Refineries in the east that use Brent crude have seen their costs go up significantly, causing two Philadelphia refineries to shut their doors in recent months, and a potential third closure in the summer. Since the Canadian and U.S. markets are so interconnected, it has ripple effects north of the border.

"So all of a sudden we've got this big black hole emerging right now and that's what's driving prices up," said McKnight.

"It's a huge domino effect, really."

In Montreal, the effect is particularly severe after Shell decided to close its 130,000-barrel-per-day refinery there in 2010, reducing competition in that market.

Now, the city relies on fuel from Suncor Energy Inc.'s (TSX:SU) refinery there, and another run by Ultramar in Quebec City.

The prices consumers are willing to stomach has gradually shifted over the years, said Toews.

He recalls that in the fall of 2005, in the aftermath of hurricane Katrina, consumers were outraged by gas prices above $1 a litre.

"But now look where we are. Six short years later, we view $1 per litre as being cheap. We would love to have gas at $1 per litre again," he said.

And after the 2008 run-up, gasoline prices above $1.40 per litre — as Montreal and Vancouver are experiencing now — "doesn't scare anybody anymore, not like it used to," Toews said.

"I think once you start getting to $1.50 or $1.60, then people really start taking notice and might start getting upset again."

Consultancy Kent Marketing Services also found an upward trend in pump prices in its latest weekly survey released Tuesday. Gasoline averaged $1.32 per litre in the last seven days, compared with $1.27 a week earlier and $1.20 a year ago.

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Energy industry experts are warning that the 14-cent per litre spike in gasoline prices in Montreal on Tuesday is just a taste of the high fuel costs Canadians can expect in the coming months.The aver...
Energy industry experts are warning that the 14-cent per litre spike in gasoline prices in Montreal on Tuesday is just a taste of the high fuel costs Canadians can expect in the coming months.The aver...
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11:29 AM on 02/29/2012
I do not understant how the entire petroleum loop is an essential service but isallowed to operate entirely indepndent of government control. Speculation and refineries should be controlled.
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Opus Fideo
Atheist. Social Democrat. Canadian.
09:28 AM on 02/29/2012
I wouldn't say I was shocked. They've been doing this non-sensical price hike on a weekly basis for years here. There is clearly collusion going on. But this is Quebec, the most corrupted province in Canada... what do you expect.

http://www.montrealgasprices.com/retail_price_chart.aspx

And for the record the jump was even bigger than the article says. I gassed up at 1.27 on Monday night, and Tuesday morning it was 1.44
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sgillhoolley
Occupy the discussion.
09:25 AM on 02/29/2012
As someone who lived in a province that paid out more than it got back (Ontario), I find the Alberta attitude to, well, quite frankly, suck. They thought nothing of taking more money than they paid out for generations, and as soon as they discover a resource that would finally put them into the position of being able to pay Canada back for all the transfer payments that they received, they decide that the oil is theirs and theirs alone. Perhaps they should leave Canada and join the USA...that is a country in which one region seems to loathe another. What a bunch of deadbeats.
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Allan Tanny
democracy not anarchy
01:02 AM on 02/29/2012
We all know about the fictitious competition amongst the oil companies. Lots of competition, but somehow they all decided on their own at the exact same time to raise the prices by 14 cents in Montreal. There is really only one way to contain this. We have to boycott-- not every company. JUST ONE. IF NO ONE BUYS GAS AT ESSO UNTIL THEY LOWER THEIR PRICE, THEY WILL HAVE TO. Then the others will follow suit. As soon the raise it, the boycott starts again. This is all windfall profits, they suck the oil out of the ground, their costs are the same toady as it was yesterday. The difference is today they are getting $54 US a gallon more for their refined product. And while it is true that perhaps the cost of Brent to their refineries in the East went up, they more than made up for it with their exports to the US at the same prices.
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Allan Tanny
democracy not anarchy
12:55 AM on 02/29/2012
What a croc. The price has nothing to do with high price of Brent crude. It simply has to do with how much the oil companies figure they can get in each market. What exactly happened yesterday to make gas go up the equivalent of 54 cents a US gallon? And how come it only effected Quebec? How about the fact that upstate New York (Plattsburgh etc) is basically supplied by the same Canadian refineries that supply Montreal and the prices there didn't go up anything like here. Same supplier, same refinery, farther drive to deliver yet prices jumped in Montreal but not in New York State. Aside from the oil companies getting us for whatever they can, is there any other reason?
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Steve Lives
The Venus Project ... look it up
12:36 AM on 02/29/2012
I'm going to say the words that get whole countries destroyed. Nationalized oil. Screw the world market, sell Canadians their own fuel for what it really costs to get it. Sell any excess on the world market after we take our share.
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north of 60
Quando Omni Flunkus Moritati
05:26 AM on 02/29/2012
That would be the smart thing to do. Build more refineries near the oilsands, and sell the surplus fuel to the world for profit to pay for health care, infrastructure, paying down the debt, etc...

The oil companies won't do that because it's cheaper to build a pipeline to Texas where they already have refineries producing a surplus of fuel from Mid East crude, and making handsome profits. More Canadian refineries just aren't as profitable.
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sgillhoolley
Occupy the discussion.
09:27 AM on 02/29/2012
I agree 100%. What benefit is it to Canada to allow our oil to be drilled by a private company, which keeps all the profits, and sells into the global market? Nationalize so that the profits help reduce our tax burden!
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11:25 PM on 02/28/2012
Oil speculators in the world market. We have suppressed technology that does not require us to burn dead plants.....

Join the Thrive movement, we can create a positive and bright future for humanity.
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tmzrules
10:27 PM on 02/28/2012
lol @Jade Stevenson. He's rich so he really shouldn't complain.His truck only gets 10mpg.Imagine
being so rich that you can afford to drive a gas guzzling dinosaur of a vehicle.
09:27 PM on 02/28/2012
They are just getting us used to it. What is the alternative? It is getting so that people are finding it hard to drive to work. Food prices are sky rocketing as a result. Where will it all end?
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sgillhoolley
Occupy the discussion.
09:28 AM on 02/29/2012
Alternative energy is the alternative. It is good that gas prices go up...soon it will make the alternatives viable. Keep going up gas prices...else people will continue to waste it and destroy our world.
11:24 AM on 02/29/2012
Thank you-- President Obama!
04:17 PM on 02/28/2012
What makes me angry the most is the people who change or make the gas prices higher. THEY DON'T PAY FOR GAS ANYWAY they have company cars expense accounts. While they say it's a bad thing for us boo hoo they are thanking whoever that they don't have to pay for it.

Here's the kicker WE pay for thier gas...... Sucks to be one of the sheeple