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Gas prices in Montreal, Quebec City didn’t follow supply and demand

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MONTREAL – Gasoline prices and retail margins in both Montreal and Quebec City were higher last year than in less populace regions of the province where there are lower sales volumes, says a study by CAA Quebec.

Pump prices aren’t following market indicators to the advantage of consumers, the Quebec division of the Canadian Automobile Association said Friday.

“The two biggest markets in Quebec don’t obey the law of supply and demand,” said CAA spokesman Cedric Essiminy.

CAA Quebec said the average price of a litre of regular gasoline was $1.08.3 in Montreal last year, compared with 98.8 cents a litre in 2009.

In Quebec City, the average price was $1.06.6 per litre last year compared with 97.3 cents in 2009.

The study found that the average retail margin was five cents a litre in Montreal last year, while the margin was 5.7 cents a litre in Quebec City – both higher than in less populous regions where there can be less competition and higher operating costs.

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“There’s seems to be a glitch somewhere and we would like to know why is that glitch happening and what’s behind that glitch,” Essiminy said.

CAA Quebec is calling on the Quebec government to take action on the issue and ask the gasoline industry to explain the situation.

The more motorists who want to buy gas, the lower the retail margin should be due to demand, Essiminy said, noting there were more than 1.7 million cars in the Greater Montreal region last year.

There’s still money to be made, though, because so many people need gasoline, he added.

The not-for-profit organization notes that the highest observed pump price in Montreal in 2010 was $1.21.9 a litre last Dec. 23.

It’s quite difficult to explain why there’s suddenly a 12 cent increase in gas prices in one week in Montreal, he said, referring to a price jump last December.

Montreal dealers paid $1.15.3 cents a litre earlier this week but were selling to consumers at $1.22.9 cents a litre, Essiminy said, questioning why the price of gasoline for consumers hadn’t dropped.

“We’re saying, please, stopping playing with the retail margins not only in Montreal but across the province.”

CAA Quebec’s study also found that the average retail margin in the Saguenay-Lac-St-Jean region dropped to 4.6 cents a litre last year from 7.3 cents a litre in 2009, a decrease of 37 per cent.

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