Living with pain at the gasoline pump

The price of gasoline has a lot in common with the weather.

It is a popular topic of conversation, particularly when the price spikes as it did in Montreal this week, but nobody, at least not the average consumer, can do anything in the moment to change it.

One thing that certainly doesn’t help is cussing out gas station employees, as has been reported that some angry motorists have taken to doing. The anger is perhaps understandable, given that prices at some stations in Montreal hit a record high of $1.54 a litre ($1.65 in Rimouski), a jump of more than 10 cents a litre from earlier in the week and almost 20 cents a litre since the beginning of summer.

It is also true that some analysts have attributed the sudden price jump to greed on the part of producers, the readiest target of consumer wrath. But there are factors in play that suggest the increase is not entirely dic- tated by the profit motive.

Industry spokespersons maintain that the main culprits include Middle East political instability that includes rising tensions between the U.S. and Iran, a production shortage caused by the recent hurricane that hit the U.S. Gulf Coast and shut down several refineries, and inflationary policies of the U.S. Federal Reserve.

The size of the sudden jump in Montreal, which was substantially greater than increases elsewhere in the country, has also been attributed to a price war among local retailers earlier this year that saw them lose money that they are now trying to recoup. There may still be deals to be had, but reliable estimates have it that anyone currently selling below $1.40 a litre, as some outlets continued to do this week, is selling at a loss in the hope of building up long-term business. Or, as in the case of some big-box stores, using cheap gasoline as a lure to get people to buy other goods inside their outlets.

There is not much to be gained by looking to the government to do something about soaring gasoline prices. Governments can do little about such contributing factors as the price of crude oil, refining costs, retail margins and transportation costs. Where governments do have a direct effect on gas prices is the extent to which they tax the product. According to the Canadian Automobile Association, taxes represent the second main component of the pump price after the price of crude.

And nowhere in the country are gasoline consumers taxed more heavily than in Quebec, which has the highest average price in the country. Gasoline taxes in Quebec currently amount to nearly 50 cents a litre, an amount the CAA says is the factor that is almost solely responsible for the 25-cents-a-litre difference between the average Quebec gas price and that in Alberta, which is lowest in the country.

No party in the recent Quebec provincial election campaign made an issue of gas taxes, nor is the newly elected Marois government likely to do anything in that direction, having pledged tax cuts elsewhere that the heavily indebted provincial treasury can ill afford.

Greater Montreal consumers pay even more gas tax than those in the rest of the province, given the 3-cents-a-litre regional surtax that goes directly to public transit. But that is a worthwhile levy that has been a boon to the transit system — commuter trains in particular — and should rightly be maintained. Higher gas prices in general also help reduce traffic congestion and air pollution from automobile exhaust.

As with the weather, though, gas prices tend to change from one day to the next. One day’s hike may be followed by another day’s drop, something that doesn’t get nearly as much attention as the hike. The best that motorists can do about this latest hike is either cut back on driving, or simply bear it until the next price drop, even though it’s hard to grin at the pump these days.