Press Room
Saint-Jérôme gasoline prices to rise following energy board decision
Montreal, July 18th, 2008 –
Option consommateurs and CAA-Quebec expressed disappointment following a decision by the Régie de l’énergie du Québec, the province’s energy board, which has ordered that an amount of 3 cents per litre, representing operating costs, be included in the minimum estimated price (MEP) of gasoline for the Saint-Jérôme area for a period of 30 months, starting July 22, 2008.
The decision will artificially inflate gasoline prices by increasing the minimum price by 3 cents. No service station located in the Saint-Jérôme area may sell gasoline below this price.
The energy board essentially based its decision on the theory—advanced by the Association québécoise des indépendants du pétrole (AQUIP)—that prices that very closely mirror the MEP would result in the disappearance of independent gasoline outlets and that the subsequent loss of competition would have a negative long-term impact on consumers.
In a joint presentation before the energy board, Option consommateurs and CAA-Quebec argued that a massive disappearance of gasoline outlets was unlikely. On the contrary, they observed that gasoline retailers in Saint-Jérôme had actually increased their volume of sales to levels exceeding the national average, even though the last 3-cent per litre inclusion period ended more than three years ago. Furthermore, as the board itself indicated in its decision, gasoline retailers in the Saint-Jérôme area have a relatively normal closing rate, and their market share continues to be significant.
MEP: an inappropriate tool
Above and beyond the board’s decision, Option consommateurs and CAA-Quebec believe that, as set out in the Law respecting petroleum products, the minimum estimated price continues to be a problem. The energy board calculates the MEP once a week, on Thursday, based on petroleum product market indicators at the end of the day. It becomes effective at midnight the following Monday, and applies all the following week. With petroleum indicators sometimes fluctuating daily, the MEP is no longer an accurate reflection of the market when it goes into effect—in reality, it corresponds to conditions of the previous Thursday. The actual retail acquisition costs may therefore be lower than the MEP, as calculated by the energy board.
By preventing retailers in Saint-Jérôme from selling their gasoline below the MEP plus a 3-cent markup, this new inclusion penalises the area’s motorists in a downward market. With energy markets so volatile, the board should use a more appropriate tool that would provide a more accurate measure of costs in the retail fuel sales sector.
Created in 1983, Option consommateurs is a not-for-profit association devoted to the defence and promotion of consumer rights. To this end, it is engaged in some thirty class action procedures and focuses on issues relating to energy, the food industry, financial services and commercial practices.
A not-for-profit organisation founded in 1904, CAA-Quebec provides automotive, travel, residential and financial services, privileges and advantages to its some 950,000 members. CAA-Quebec’s realistic price of gasoline in Quebec is calculated daily and available to the public in the Gasoline Watch section of the organisation’s website at www.caaquebec.com/gasolinewatch.
For information:
Option consommateurs
Olivier Bourgeois
514 598-7288
CAA-Quebec
Roxanne Héroux
514 861-7111
rheroux@caaquebec.com
CAA-Quebec
Philippe St-Pierre
418 624-2424, ext. 2418
pstpierre@caaquebec.com
The decision will artificially inflate gasoline prices by increasing the minimum price by 3 cents. No service station located in the Saint-Jérôme area may sell gasoline below this price.
The energy board essentially based its decision on the theory—advanced by the Association québécoise des indépendants du pétrole (AQUIP)—that prices that very closely mirror the MEP would result in the disappearance of independent gasoline outlets and that the subsequent loss of competition would have a negative long-term impact on consumers.
In a joint presentation before the energy board, Option consommateurs and CAA-Quebec argued that a massive disappearance of gasoline outlets was unlikely. On the contrary, they observed that gasoline retailers in Saint-Jérôme had actually increased their volume of sales to levels exceeding the national average, even though the last 3-cent per litre inclusion period ended more than three years ago. Furthermore, as the board itself indicated in its decision, gasoline retailers in the Saint-Jérôme area have a relatively normal closing rate, and their market share continues to be significant.
MEP: an inappropriate tool
Above and beyond the board’s decision, Option consommateurs and CAA-Quebec believe that, as set out in the Law respecting petroleum products, the minimum estimated price continues to be a problem. The energy board calculates the MEP once a week, on Thursday, based on petroleum product market indicators at the end of the day. It becomes effective at midnight the following Monday, and applies all the following week. With petroleum indicators sometimes fluctuating daily, the MEP is no longer an accurate reflection of the market when it goes into effect—in reality, it corresponds to conditions of the previous Thursday. The actual retail acquisition costs may therefore be lower than the MEP, as calculated by the energy board.
By preventing retailers in Saint-Jérôme from selling their gasoline below the MEP plus a 3-cent markup, this new inclusion penalises the area’s motorists in a downward market. With energy markets so volatile, the board should use a more appropriate tool that would provide a more accurate measure of costs in the retail fuel sales sector.
Created in 1983, Option consommateurs is a not-for-profit association devoted to the defence and promotion of consumer rights. To this end, it is engaged in some thirty class action procedures and focuses on issues relating to energy, the food industry, financial services and commercial practices.
A not-for-profit organisation founded in 1904, CAA-Quebec provides automotive, travel, residential and financial services, privileges and advantages to its some 950,000 members. CAA-Quebec’s realistic price of gasoline in Quebec is calculated daily and available to the public in the Gasoline Watch section of the organisation’s website at www.caaquebec.com/gasolinewatch.
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For information:
Option consommateurs
Olivier Bourgeois
514 598-7288
CAA-Quebec
Roxanne Héroux
514 861-7111
rheroux@caaquebec.com
CAA-Quebec
Philippe St-Pierre
418 624-2424, ext. 2418
pstpierre@caaquebec.com
