Why Gas Is So Damn Expensive In Montreal Right Now, According To An Expert

If you drive a car, the price of petrol may be making your head spin these days. In fact, according to CAA-Québec, Montreal gas prices are currently near some of the highest in recent history.

On October 16, CAA-Québec quoted the average pump price in Montreal at 150.9 cents per litre and the realistic pump price at 152 cents per litre.

This is consistent with how much gasoline has cost over the past week or so, averaging 147.8 cents per litre, with prices above the 150-cent threshold spotted on the Island. It's also consistent with global trends.

So why is this happening to us? Have we collectively angered the gas gods who are making us suffer at the hands of their merciless wrath?

We asked Moshe Lander, a senior lecturer in economics at Concordia University, and turns out it's not that. He explained what's actually happening in basic terms that are easy to understand.

Supply & Demand

The reason gas is expensive right now, according to Lander, is as simple as the concept of supply and demand.

"What would happen if you were to decrease the amount of supply available of any product? Imagine that Doritos bags go disappearing off the shelves [...] What inevitably happens? The price of Doritos [...] they go up," he said.

"If you imagine at the same time that there's a whole bunch of consumers that start showing up that want to buy Doritos, prices are going to go up. And so if you take those two components and put them together, prices go way up [...] That's all that's going on in the gas market right now."

He explained that as lockdowns lift and people get back to their pre-pandemic routines — including travelling, flying and driving more frequently — this increases demand for petrol as well as the byproducts that go into it, which are also used to make jet fuel.

At the same time, he said, there are supply constraints, such as oil pipelines not being built around the world and global supply chain disruptions, which he called the "perfect confluence of factors."

Sticker Shock

Lander told MTL Blog that we should also consider our own perception of gas prices when evaluating them.

"Gasoline prices go up and down naturally," he said.

"The fact is that they're kind of returning to levels that are a little higher than they were 18 months ago, but they're not that far off [...] Over the last 12 months where nobody's been going anywhere, we've been used to seeing the prices down at around $1 a litre. Now that they're returning to $1.40, It's like, [...] 'Wow, that happened suddenly,' and I think that's part of the problem, too."

The New Baseline

If you've been pushing your car to its limits in the hopes that gas prices will come down soon, you may want to think again.

Lander said he expects recent prices to become "the new baseline."

According to Lander, if Canada's new Liberal government wants to successfully uphold its environmental promises, the price of gasoline will have to increase substantially.

"I think if we're upset right now at $1.45 a litre... just wait," he said. "That's going to be a nice nostalgic memory."

This article's right-hand cover image was used for illustrative purposes only.