Did you reduce your trips with your gas -powered vehicle because the price at the pump exceeded $ 2 per liter? Quebecers seem reluctant to change their habits in this area, according to a recent Ministry of Finance analysis obtained by Radio-Canada.
In 2008, the ministry conducted a study on the impact of rising prices of hydrocarbons on demand, but this has only recently been updated.
Government economists have observed for more than 20 years that a 10% increase in the pump price leads to a 1.2% drop in consumption on average. This year, it even increased with the strong economic recovery, despite the explosion in prices.
In other words, other than cursing the bomb, motorists reacted little to the price increase because demand was so inelastic. In microeconomics, price elasticity is a way of calculating our sensitivity to price change.
In the past year, according to the Régie de l’énergie du Québec, the price of regular gasoline has risen from $ 1.30 per liter to $ 2 per liter on average. This is an increase of 54%, but, in theory, consumption has decreased during this period by only 6.5%.
Beyond uncertainty about global oil supply and limited refining capacity, demand is not resilient allowing the industry to keep prices high. If it is more resilient, prices will fallexplained Pierre-Olivier Pineau, professor and holder of the Energy Sector Management Chair at HEC Montréal.
It’s a short-term elasticity and, in the short term, very difficult for people to adjust, he added. They choose housing and vehicles, and they can’t immediately change their way of moving.
” We often have the impression that this is a bad time to pass and the rest will come later. This is what we almost always see in the gas price cycle. “
The increase in prices is not reflected in the use of public transport, according to the Société de transport de Montréal. The increase must be long -term to feel the effects of the modal shiftunderlined the organization.
Lack of data
We tried to find out the amount of fuel consumed in Quebec last year to get a more concrete idea of the impact of price variations. Mission impossible.
Pierre-Olivier Pineau regrets that these numbers are not disclosed by governments and sellers of fuel in Canada. However, this data will be very useful to the public when Quebec’s energy policy provides for a 40% reduction in petroleum products consumed by 2030.
The fruit on the side in public finance
Generally, an increase in the price of fuel should be synonymous with an increase in revenue for the State.
However, recently in an interview, the Minister of Finance, Eric Girard, told us that the impact will ultimately on the side in the finances of Quebec.
The QST applied to the pump price increases government revenues, but growth in fuel and heating costs for the government must be considered. We should add that revenue from the Quebec -specific fuel tax, set at 19.2 ¢ per liter, is declining at the same rate of demand.
Source: Radio-Canada
