Gas prices are driving us up the wall
Apparently, we’re just $44 away from happiness.
(Texte français disponible ici)
Gas prices are set to drop by ten cents a litre, courtesy of the federal government, which has suspended the excise tax for five months. Can you hear the sighs of relief from coast to coast?
What exactly are we talking about here? It must be a lot if the headlines in Quebec are to be believed.
“Respite at the pump,” said La Presse the day after the announcement.
Same headline for Radio-Canada.
Le Journal de Montréal, less enthusiastic, felt that the respite was “small.”
This is consistent with their coverage, since the Journal tends to always take the view that gas is too expensive. But overall, the tone remains positive.
A report in La Presse began as follows: “A breath of fresh air at the pump: after tightening their belts in the face of rising gas prices, the motorists interviewed see a return to normal, with the cost per litre expected to drop as early as next Monday.”
A customer met at the gas station, as delighted as he is relieved by the good news, is even considering resuming his in-person business meetings after having recently suspended them.
Everyone is happy. Just imagine: in the same week, Caufield reaches 50 goals, Suzuki hits 100 points, Céline starts performing again, and gas costs less. All our collective dreams have come true. Yay!
At the risk of being a party pooper, has anyone thought to calculate what the suspension of the excise tax actually amounts to? Just out of curiosity? Okay, let’s do it.
What is the average distance a car travels each year in Quebec? In 2023, according to the most recent data, it was 12,435 km.
What is the average fuel consumption of a car for the same year? 8.1 litres per 100 km.
How much will be saved as a result of the excise tax suspension? Ten cents per litre.
12,435 km × 8.1 L/100 km = 1,007.2 litres per year. At ten cents per litre, the savings amount to $100.72.
Plus the GST and QST, since the excise tax is subject to sales tax.
$100.72 + 14.975% = $115.80.
For every vehicle your household owns, you’ll save an average of $116 per year, and less if one of the cars is a hybrid. But the rebate will be in effect from April 20 to September 7—just under five months, or 140 days.
$115.80 x 140/365 = $44.42.
All this forty-four bucks?
If you drive 25,000 km a year—which is double the average—you barely reach $90. How much does a coffee at Starbucks cost again? Your streaming services, including the ones you don’t watch? Cable? Your last lunch at Subway? There are all sorts of ways to save $50 or $100 in five months if one puts their mind to it. Obviously, most of the time, we don’t.
What is it with gas that makes us so worked up?
Let’s get back to the guy who’s going to start seeing his clients in person again. If he drives 1,000 km a week, which is a lot, he burns a little over 120 litres a week. At ten cents a litre, the savings amount to $12.30.
I don’t know what he sells to his clients, but if he’s off for $12 a week, maybe he should switch fields and do something more lucrative, like collecting empty drink cans. (Don’t laugh—the deposit is now ten cents; it adds up faster than you think.)
In the same article, an Uber driver lamented that his earnings had dropped by $12 per hour since the start of the year. That’s huge when you’re making around $20 an hour. It’s understandable that he’d wonder if it’s worth continuing.
Still, on its own, that’s a lot. Gas prices rose from $1.50 in January to a peak of $2 in April—a 50-cent difference. To see costs increase by $12, our friend would have to burn through 24 litres every hour. Does he own a Hummer?
A very busy Uber driver can cover 50,000 to 60,000 km per year. Let’s say 60,000 km. That’s 1,200 km per week, or 240 km per day if he works five full days. Let’s also say he’s very efficient and manages to cover that in eight hours—that’s 30 km per hour. (Which corresponds to the order of magnitude for a taxi, for comparison.)
Since it’s 10 litres per 100 km, for 30 km it’s three. Let’s round that up to four, as we had a cold winter.
At 50 cents more per litre, multiplied by four litres, that comes to two dollars more per hour, not twelve. It’s unpleasant, but far from the “estimate” of $12 that the reporter took for granted.
Which gets me thinking. It’s nice to know how much we’ll save over the next few months, but how much more have we paid to fill up since the Donald decided to bomb Iran?
According to the Régie de l’énergie, the average price of gas was $1.80 in Montreal in March, 30 cents more than in February. Using the figures above for annual mileage, we arrive at 1,000 km per month, give or take, which is a consumption of about 80 litres.
In March 2026, filling up cost you $24 more (80 litres × 30 cents). Add the first two weeks of April and assume gas is $2 per litre, and that adds another $20 (40-litre × 50 cents).
Since the start of the war in Iran, you’ve paid $44 more for your gas.
(Which is precisely the average rebate Ottawa is offering over the next five months, as we saw above. Who would have thought?)
$44. Over six weeks. $7.33 per week.
Did you feel your belt “tighten” that much?
That’s not all. The federal government estimates that the tax holiday will cost it $2.4 billion. About half of that is for individuals and the rest for businesses, including the suspension of the excise tax on diesel.
So, no one is saving anything; we’re simply putting this on the collective credit card, which is already pretty full, since Ottawa is projecting a $65 billion deficit for 2026–2027.
This makes even less sense since the rebates will be an individual benefit, while the resulting debt and eventual repayment will be a collective responsibility, completely decoupled from individual consumption. In other words, if you drive little, own an electric car, or use public transit, you will—for the same taxable income—be liable for the same share of the repayment as someone who drives 50,000 km a year in a Cherokee.
We also know from experience that the freed-up tax revenue tends to be recouped by oil companies and retailers. That’s what happened in Quebec in 1984. So, there’s a risk of giving the oil companies a windfall. Some columnists who applaud the suspension of the excise tax actually see the danger and are calling for government intervention to prevent this from happening. Maybe keeping the tax as it were would not have been such a bad idea after all…
It also goes agains the objective of reducing gasoline consumption, pollution, and the global warming that comes with it. That used to be a goal most of us shared. Before it hit our wallets.
Canada alone won’t solve the planet’s environmental problems—and Quebec even less so—but it wouldn’t hurt to lead by example. When I die, I’d like to be able to look my children in the eye and tell them that I did everything I could to avoid leaving them a planet in worse shape, rather than having saved 50 or 100 dollars whenever possible.
Obviously, it will take some sacrifice on our part and some measure of political courage to lead the way. But perhaps the problem starts with us and the signal we send to our elected officials.
+++++++
Why do we get so worked up over gas?
I honestly can’t understand it any other way than that, collectively, we’re not very good with arithmetic.
I can’t help but think back to news reports which showed us some guy who took a detour to save eight or ten cents a litre, even though his tank is still half full, with a line of cars and drivers in the background waiting their turn for half an hour, and the engine idling if it’s winter.
Below is the price of gas in Montreal since 1990. It’s similar for the rest of Quebec unless you live in Kuujjuaq. The lighter line is the price posted at the gas station. The darker line shows the price adjusted for inflation. Or, in other words, the price a litre of gas would have cost five, ten, or fifteen years ago, if money had the same value then as it does today.
In real terms, the price of gasoline has remained roughly the same for the past twenty years. Before the war with Iran, it had been falling for a year and a half and had reached its lowest level in five years. In fact, to find a lower real price over a long period, one has to go back to the previous century.
Even during when gasoline briefly sold at $2 per litre, it did not cost more than it did at the peak reached in 2008, nor during the entire period between spring 2011 and summer 2014. It was also considerably cheaper than four years ago, when it rose to $2.41 (in current dollars) in June 2022. And we’re talking about the monthly average, not a single day.
Paying $1.50 or $1.80 a litre might seem like a lot, but our incomes have also gone up, and cars tend to be more fuel-efficient than they were ten or fifteen years ago. And if you lived in Europe, it would be $3 a litre and more.
But reality holds no sway when it comes gas prices. We’re not reflecting. We’re just reacting.
The best example is the federal carbon tax, which was abolished last year. (As a reminder, Quebec has its own mechanism, the carbon market, which is more effective at raising funds than at spending them efficiently. We’ll talk about that another time.)
The federal carbon tax was a model of elegance in terms of public policy: it encouraged behavioural change, it was easy to adjust, and it was fiscally neutral, since the government returned nearly all of the revenue (except in provinces where it didn’t apply, such as Quebec). For 80% of Canadians, the carbon tax was a net gain: Ottawa sent a cheque that exceeded the amount of tax paid during the year.
The problem is that those who put the carbon tax in place did a lousy job of selling it.
And since almost everyone sees red when it comes to gas prices, Pierre Poilievre and others seized the opportunity, by asking repeatedly that an unpopular government “axe the tax”. A majority of Canadians came to believe that the carbon tax was making them poorer, and wanted it abolished. The Liberals were headed for the slaughterhouse in the upcoming election. Not just because of that, but largely because of that.
The carbon tax may be the biggest political communication failure in 50 years: a government was giving money back to almost everyone, and almost no one understood or believed it.
So what did Mark Carney, former UN special envoy for climate action and finance, do once he became leader of the Liberal Party of Canada? Did he explain that the carbon tax was the best policy to encourage people to reduce their carbon emissions? Did he point out that it made most Canadians richer and encouraged people to change their behaviour? Did he note that it had broad support among economists and that thousands of them had backed it in a public statement, including 28 Nobel laureates?
Of course not.
Mr. Carney promised to abolish the carbon tax because, as a pragmatic politician, he realized there was no room for rational discussion on the issue, since too many people don’t take the time to think things through and do the math—starting with those who report the news.
This column is taking a two-week vacation break. Thank you to everyone who reads and supports this space. See you on the other side!
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This text is 2,094 words long, or about nine pages of a book. The research, writing, and data crunching took me just under three days.
My name is Patrick Déry. I write (mostly in French) for a living, and do my best to Quebecsplain in English in this space.
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