09/11/2012 08:40 EDT | Updated 11/11/2012 05:12 EST

Montreal gas prices soar to record high

Gas prices in Montreal soared to a record high Tuesday afternoon at some service stations, with petroleum producers partly blaming instability in the Middle East and Iran.

Several stations were charging 153.4 cents a litre, though fuel could still be had for as low as 140.9 a litre at other pumps around town.

That tops the previous record high, set in 2008, of 151.4 cents a litre. The old record was set against the backdrop of all-time high prices for crude oil.

Carol Montreuil, vice-president of the Canadian Petroleum Products Institute, an industry group of big oil companies, said some of the reason for the increase is that most city gas stations were keeping prices down over the last few days basically at cost, at a level where they weren't making any money.

Quebec energy board calculations show that the wholesale price of gasoline plus all taxes and levies came to 139 cents a litre for Montreal on Tuesday, while the average retail gas price in the city in the early morning was 140.

"Consumers have been benefiting [from an] abnormally low price over the last few days, so anytime we go through a period like that, there's usually an increase that follows it," Montreuil said.

The CAA's online calculator of fair gas prices suggests a realistic retail price for Montreal is currently 145 cents a litre. That's based on an average retail margin of six cents a litre.

Average price creeping up

The city's average gas price is up from 134.5 at the start of the summer and 132.5 at this time last year, according to data from Natural Resources Canada.

Montreuil said the underlying price of oil is being driven by several factors. One is the prospect that the U.S. Federal Reserve will announce more loosening of its monetary policy on Thursday, which tends to drive up inflation and boost commodity prices.

"Also in the backdrop, what we've seen over the last few months in terms of tensions between Israel and the United States and Iran has not ended yet. Quite the contrary," Montreuil said.

The high end of prices in Montreal is currently tops among Canadian provinces. Labrador City also has expensive gasoline, averaging 148.1 cents a litre over the last week, according to research firm Kent Marketing Services. The best deals are in Alberta, where last week's average pump price was 113.9 cents in Red Deer and 115 in Edmonton.