Quebec to force gas stations to report their prices. Will it lower fuel costs?

Quebec wants to boost transparency around gas prices.

The province will force gas stations to report their prices to the government, and it’s going to publish them online. 

Pierre Fitzgibbon, Quebec’s economy minister, made the announcement on Thursday as he revealed a government-commissioned study that recommended making some changes to how Quebec regulates gas stations. 

The changes are meant to lower prices, especially in regions where it is more expensive. The study, conducted by Montreal economics professor Robert Clark, found that gas is more expensive in the Capitale-Nationale, Gaspésie and Côte-Nord regions in particular.

“We see that the price trend in some local markets is simply incoherent with what we would like to see in a competitive gasoline market. So clearly that bothers me,” Fitzgibbon said.

In his report, Clark raised several possible explanations for the price disparities, including the structure of local markets and the concentration of gas station ownership.

‘Floor price’ to be removed

His report made several recommendations intended to protect consumers. Fitzgibbon said Thursday that Quebec would adopt two of them: the mandatory publishing of gas prices on a government website and repealing a floor price on gasoline.

The “floor price” was written into Quebec’s Petroleum Products Act. It was intended to prevent larger players in the gas market from undercutting smaller players. 

Fitzgibbon said it was no longer useful and the amendment to remove it from the law would be introduced at the end of the parliamentary session. 

“We wanted to protect the independents from predators who wanted to concentrate the market so they could, of course, charge higher prices,” he said. “Consolidation has taken place, and there has been a very high level of concentration for several years now. So, the clause as such hasn’t really helped.”

But Pierre-Olivier Pineau, a professor in the department of decision sciences at HEC Montréal, said the abolition of the gasoline “floor price” will have no affect on prices consumers see at the pump.

He said he thinks the best way to reduce the price of fuel is to reduce demand by encouraging alternative modes of transportation. 

“If sellers manage to raise prices, it’s [thanks to] the very strong demand,” he said. “That gives them power, and everything from carpooling, public transit, telecommuting — all those are tools to fight against the sellers’ market power,” Pineau said in an interview with Radio-Canada. 

WATCH | A closer look at last month’s jump in gas prices: 

What’s behind the jump in gas prices?

In 24 hours, prices rose an average of 15 cents per litre in Quebec and Ontario — that’s the highest increase in nearly two years.

Fitzgibbon said he expects the measure — and the new transparent gas price registry — to lower prices. 

“I think daily or weekly transparency will mean that people will be able to go where it’s cheaper, on the one hand, and on the other, well maybe it will have an effect, a positive pressure on the ecosystem too because it’s going to be more visible,” he said. “People, journalists are going to follow it, everyone’s going to follow it.”

Simon Bourassa, spokesperson for the Canadian Automobile Association’s Quebec branch (CAA Québec), said the association was in favour of any measure that could lower the price of gasoline. 

CAA Québec has an online platform that keeps track of gas prices, but Bourassa said that forcing gas stations to report the price will help people shop around for it. 

“We hope it has a favourable effect on the price of gas,” Bourassa said.

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