Quebec moves to ditch floor price on gasoline, make retail market more competitive
Removal of floor prices meant to increase competition and lower price for Quebecers at gas pump
Quebec plans to remove the floor price on gasoline and other fuels, Economy Minister Christine Fréchette announced Monday in a news release.
"Our goal … is to improve competition so that Quebecers pay less for their gas," Fréchette said in the release, adding that the move will also help protect the economy and consumers.
A floor price is the lowest legal price that can be paid in a market for goods and services.
In Quebec, the floor price for gas was written into Quebec's Petroleum Products Act and was introduced in the 1990s. It was intended to prevent larger players in the gas market from undercutting smaller players.
The current mechanism, the news release reads,"limits competition between retailers and, as a result, leads to higher prices in the long term."
"It no longer has its place," said Fréchette's parliamentary assistant, Samuel Poulin.
The government also wants to boost transparency around gas prices, so consumers can be better informed.
Starting in 2026, retailers will be required to report any changes in gasoline and diesel fuel prices to Quebec's energy board, Régie de l'énergie, in real time. The board will then be required to make the information available online.
To implement the new measures, the government will be proposing amendments to Bill 69, an Act to ensure the responsible governance of energy resources.
The amended bill will then have to be passed into law.
The proposed legislation stems from recommendations made in a 2024 government-commissioned study carried out by Robert Clark, an economics professor at Queen's University.
Short-term gains, long-term pain
Not everyone, however, believes getting rid of floor pricing will have the desired impact.
Pierre-Olivier Pineau, chair of energy sector management at HEC Montréal, said consumers might get short-term relief at the pump but it's unlikely to continue in the long run.
Pineau believes that getting rid of the floor price will initially allow gas stations to lower their prices, but that will lead to price wars.
Those who stand to benefit from a price war, he added, are the bigger retailers who can sell other goods beyond gasoline.
In that kind of scenario, smaller gas stations will be unable to compete and some will be forced into bankruptcy, ultimately leading to less gas stations, less competition and probably higher prices, Pineau said.
Jean-François Landry co-owns a small Ultramar gas station in Pointe-à-la-Croix, Que., just a few kilometres from the border with New Brunswick.
He said nixing the floor price won't change anything for him, because gas stations always pay more than the minimum price regardless.
What he wants is for Quebec to follow the federal government's lead and drop carbon pricing. The federal carbon price, which applied in most provinces and territories, was officially scrapped at the start of the month. As of April 1, Quebec remains the only province with a price on carbon.
"All the other province take off the carbon tax and Quebec keep it," Landry said. "So the price is always higher."
So much so that last week, Landry says his gas station registered an 85 per cent loss of customers.
Landry said if Quebec doesn't plan on axing its price on carbon, then it should put in place special relief measures for border businesses to allow them to compete with neighbouring provinces.
Maintaining carbon pricing
Pineau agreed that floor pricing isn't what's keeping gas prices high in Quebec, but rather the taxes.
Ontario has a nine-cent tax on gas, whereas Quebec's is around 30 cents, including nine cents for carbon.
Pineau is a proponent of the province's carbon pricing system and believes it should be maintained.
He does, however, question the government's messaging.
"It's a very bad signal … to make [consumers] believe that they will be winners in the long term by paying less for gas," he said.
According to Pineau, there's a general agreement in the province that we need to act on environmental issues, and to do that, "you need a price signal that leads people to change their habits."
Blandine Sebileau, a mobility analyst with Équiterre, an environmental advocacy group, said the organization understands the government's decision as being a way of maintaining the carbon tax, while also providing some relief to consumers.
"We understand how high gas prices can put pressure on families and how they can become vulnerable to the cost of their private transport," Sebileau said.
But like Pineau, Sebileau said the new measures won't address long-term needs.
Gas prices, she said, will continue fluctuating, exposing households to more uncertainty regarding the cost of their mobility.
"It doesn't remove our dependency on the car and gas," she said, noting that most vehicles come from the United States and gas from out of province.
Sebileau said the answer lies in developing better public transit services and options that benefit everyone.
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With files from Rowan Kennedy and Matt Lapierre