Why gas prices are higher in Montreal

Gas prices are climbing nationwide, but Quebec shows wide variation as some stations cut margins to stay competitive.

Drivers across Canada have been seeing higher prices at the pump in recent days as global oil markets react to the war in Iran.

But in Quebec, analysts say an unusual dynamic is also playing out: gas stations in some regions appear to be cutting their profit margins to stay competitive.

According to Quebec’s energy board, the average price of a litre of gasoline in Montreal and Laval was roughly $1.75 on Wednesday. Meanwhile, several other regions were noticeably lower, closer to about $1.62 in areas such as the Eastern Townships and Chaudière-Appalaches.

Gas price analyst Dan McTeague said the higher prices seen in Montreal are actually what drivers should expect.

“If you’re seeing gas stations charging $1.75, $1.77 or even $1.79 a litre, that’s normal,” he said.

In fact, he said significantly lower prices in a major urban market should raise questions.

“If they’re charging $1.63 or $1.60, you have to ask yourself what the angle is and what the catch might be, because you’re paying for it somewhere else,” McTeague said.

Competition squeezing margins

While the cost of fuel has increased overall, McTeague said retailers in regions of Quebec appear to be absorbing part of the increase themselves — shrinking their profit margins in the process.

In some cases, stations may even be selling gasoline at a loss.

“There’s a bit of a game here,” he said, noting that stations sometimes lower prices to attract customers and remain competitive with nearby competitors.

However, McTeague said, offering fuel below the typical market price in Montreal would be unfeasible.

“Selling gasoline under about $1.67 a litre in Montreal today simply isn’t economical,” he said.

Operating costs are also much higher in large cities than in smaller communities.

“You cannot run a gas station in a city like this without paying significant municipal taxes and the costs of operating your site,” McTeague said. “Those are not inexpensive locations.”

He added that many locations now also rely heavily on convenience store purchases to make up the difference for lower prices at the pump.

“A lot of these gas stations are no longer selling gasoline as much as they are selling groceries,” McTeague said. “They’re becoming mini-marts, and that’s where the money is made.”

Other fuel types can also help balance the books — with stations that may offset losses on regular gasoline through higher-priced premium fuel or diesel sales, he added.

Small changes to help drivers save

For motorists concerned about rising costs, CAA-Quebec spokesperson Nicolas Ryan said small adjustments in daily habits can help reduce fuel consumption.

With warmer weather approaching, he suggested some drivers may also be able to rely less on their vehicles.

“Spring is coming up and summer is around the corner,” Ryan said, encouraging people to consider active transportation or public transit when possible.

Longer-term decisions may also help reduce fuel expenses, he added.

“For people driving gas-powered vehicles, it may be worth thinking about an electric or hybrid model, especially if a lease is coming to an end,” he said.

Ryan also pointed to simple driving habits that can make a noticeable difference.

Reducing highway speeds from 120 km/h to 100 km/h can cut fuel consumption by roughly 20 per cent, he said, while avoiding heavy air-conditioning use can also improve efficiency.

“Small changes in habits can quickly translate into real savings for drivers,” Ryan said.

For now, analysts say the biggest uncertainty is what will happen next — as global oil markets continue to react to events abroad and competition between stations shapes what drivers ultimately pay at the pump.