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Quebec's weird gas policy

Quebec's weird gas policy
Vincent Geloso

Quebec always need to set itself aside from everybody else, sometimes in very strange fashions. Amidst consumer complaints about high gas prices, the Quebec government surrendered to the demands of independent retailers last Friday, raising the minimum price of gas at the pump in the Saint-Jerôme area, on the north shore of Montreal, to $1.22 per litre.

With oil prices are skyrocketing, it seems strange that a governmental agency saw fit to hold off the competitive forces of the market exactly when consumers need them most.

Close to a decade ago, the Quebec government implemented a minimum price that no retailer could undercut, with the intent of protecting small retailers from “unfair” competition from big oil corporations. Independent retailers were complaining that they couldn’t compete with companies like Costco, which was offering gas below production costs.

But the “independent” retailers bear their name badly — they are not really independent at all. They supply themselves at the refineries of the big oil corporations and thus need to sell gas above the price they paid to acquire it. Since they lack the market access, vast distribution networks and general economies of scale found in larger companies, small retailers can’t play price-war games like the big guys. Luckily for them, the government controls prices, making true competition impossible and leaving the consumer holding the short end of the stick; the independent retailers have no incentives to compete and improve their services.

The ultimate proof of small retailers’ inability to compete is that, to stay afloat, they have to lobby the government to increase pump prices exactly when oil prices are at their highest in nearly 30 years. I am speechless as to why nobody in the Quebec media noted this absurd paradox.

To add insult to injury, the independent retailers, who have successfully lobbied the government to raise prices on three consecutive occasions, are claiming that they are doing this to protect capitalism. If these price controls were removed, they say, competition would suffer because the number of retailers would decrease.

If they really believe this, their vision of competition is one where nobody competes to win. And we don’t call that capitalism, we call it socialism.

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