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Latest Headlines
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Jun 9, 2008 5:34:00 PM MST
$1.50 gas in Montreal could signal similar prices across Canada (Mtl-Gas-Prices)
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MONTREAL _ Retail gas prices flared past $1.50 per litre on Monday as motorists in parts of this city continued to feel the effects of last week´s dizzying run on oil.
Pump prices in Montreal´s west-end climbed as high as 151.9 cents a litre, more than 10 cents higher than prices over the weekend.
The average price of gas in Canada on Monday was pegged at 134.77 cents a litre by the website gasbuddy.com
CAA-Quebec said the price of gas in Montreal reflected market conditions that the rest of Canada won´t be able to avoid for much longer.
"What is worrying is all this volatility around the price of crude as well as refined gas," said spokeswoman Roxanne Heroux.
"We have seen increases like this in that past that didn´t reflect the market but profit margins that were too big. This time it´s the market."
Montreal often sees sharp price increases at the pump on Mondays, which then decline incrementally throughout week.
Heroux put the blame of the latest increase on rampant speculation sweeping the oil markets.
"The speculation is unjustified and to the detriment of motorists," she said.
The oil industry, however, disputed the reasons for the sharp jump in the price of gas.
Taxes make up about 40 per cent of the pump price in Montreal, which gives the appearance the spike is localized to the island, said Carol Montreuil of the Canadian Petroleum Products Institute.
In his estimation, the cost of crude oil accounts for 50 per cent of the pump price, while the remaining 10 per cent _ or about 15 cents per litre _ is the retailer´s discretion.
"We have overblown the importance of speculation," Montreuil said. "Speculation merely exacerbates a situation...speculators are attracted by a market that is tense."
In other words, as long as demand continues to outstrip supply, oil markets are unlikely to turn bearish for a sustained period of time.
On Friday, the cost of oil per barrel jumped US$11, topping out at $139.12. A fresh in the American dollar earlier in the week is thought to have been the catalyst for the rally.
"What we´re feeling (on Monday) is clearly a backlash of what happened on the market on Friday," Montreuil said.
Though oil futures cooled somewhat in Monday trading, Heroux warned gas prices could hover around the $1.50 mark for some time.
"The last time we saw prices like this in Montreal was after Hurricane Katrina and that only lasted for a couple of hours," she said.
"We really don´t know what to expect for the rest of the summer."
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