Gas prices shot up by about 15 cents to $1.27 per litre across the island of Montreal, Laval and the Lanaudière region Tuesday morning.
Last year, CAA-Quebec noted that the average price at the pump was $1.02.
Prices remained low elsewhere in the province, hovering around $1.05 and $1.11.
READ MORE: How much do you spend on tax at the pump?
So, why are Montrealers paying more for gas than the rest of the province?
According to CAA-Quebec, the following factors can affect the price at the pump, and can vary from region to region:
- Seasonal changes
- Climate conditions
- Increased demand
- State of world reserves and production
- Limited refining capacity
- Devaluation of the U.S. dollar
- Geopolitical tensions
READ MORE: Pain at the pumps: Montrealers paying premium for gas
The price per litre of gasoline is due to several factors:
Price of a barrel of crude oil
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The price of crude oil is set by the world market based on supply and demand.
Prices go up as demand increases, but stocks decrease.
Taxes
Taxes are added to every litre of gasoline that you purchase; in Quebec, it’s $0.1920 per litre.
It is the main factor responsible for significant price differences between Quebec, the U.S. and other provinces.
In Canada, all gasoline sales are subject to GST and the excise tax, but it varies from one province to another.
READ MORE: Gas prices in Montreal: has “pain at the pump” become the “new normal”?
Refining margin
This is the cost for oil companies to produce different crude oil-based products, including gasoline, kerosene, diesel, fuel oil, etc.
The refining margin, which covers production costs and profits for refiners, represents the difference between the price of crude oil and the rack price.
This amount is the same at pumps across Quebec, but varies throughout the year.
Rack price
The rack price, or the amount paid by customers based on the Port of New York, is the source of the pump price.
It determines the minimum petrol price estimated by the Régie de l’énergie du Québec each day.
READ MORE: Gas prices in Montreal, Quebec City didn’t follow supply and demand
Retail margin
The retail margin is the difference between the price at the pump and acquisition, including operating expenses at a gas station, as well as the retailer’s profit.
It varies from one region to another in Quebec.
Transportation cost
Transportation cost is the estimated cost of moving gasoline from the rack to the service station.
It is a set amount that varies from one city to another.
Customers who fill up farther away from the depots will pay more, but to avoid an imbalance between the regions, the Quebec government has lowered its fuel tax.
Should you fill up today? Check out CAA-Quebec’s Gasoline Watch app.
rachel.lau@globalnews.ca
Follow @rachel_lau
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