REGINA - With Canada Day and summer vacation season around the corner, many folks will be heading to the pumps to fill the gas tank for the big road trip.
But the question then becomes where to fill up, and will the good prices last? To answer that question we turned to Dan McTeague, who is behind GasWizard.ca that lists gas prices in cities all over the country.
Based on what he had to say, it might be a good idea to fill up the gas tank in Saskatchewan before that road trip to a different province.
“For now, the best place in the country to buy gasoline is in fact Saskatchewan, in particular Regina,” said McTeague when we spoke to him last week.
In Regina, GasWizard.ca had pointed to prices at 130.9 cents/L as of Friday.
But there are some places in Regina offering lower prices. Regina Discount, Regina Messenger and Regina Cabs had the lowest prices, selling regular gas at 115.9 cents/L as of Friday. There were other venues that also offered some lower-than-the-average prices.
“Regina is the cheapest,” said McTeague. “Some stations offer for 120-125 (cents/L). Winnipeg is a little bit more expensive if you're going east in the 130 range. And, of course, if you're heading over to Alberta, you might find some at 127. You might find them as high as 136-137 in Calgary. So right now the sweet spot, the best spot for gasoline, and that's pretty much the entire country, is in fact Saskatchewan.”
Forecast for this summer
As for what to expect this summer, McTeague believes things are stable, based on what he sees happening with the wholesale price.
“In fact, the spot market for gasoline dropped about $0.18 a gallon, good enough for about a $0.06 decrease, which would put downward pressure on prices here in Saskatchewan,” said McTeague. It means that “we're looking at a net decrease here in the province of about $0.06 a litre, and that price is likely to stay for the foreseeable future, especially as we get through the lazy hot days of summer.”
Much of the reason for that is due to the ceasefire in the Middle East in the situation involving Iran, Israel and the USA. Not long ago, there had been a spike in gas prices due to fears that the tensions with Iran would impact supply.
“That's what caused prices to move up a bit, especially outside of Saskatchewan. But in Saskatchewan as well, we've seen prices drop, moderate, and reflect in response to the new reality that there is no more geopolitical risk that might threaten the supply of global oil,” said McTeague.
“Of course, oil is an internationally traded commodity used by everyone everywhere, and so it had gone up about two weeks ago. Now, it's come right back down.”
For the month of July, McTeague expects stable prices, and “short of any refinery, Co-op refinery in Regina or some refineries in the Chicago area having trouble which I don't see happening just yet, (and) short of hurricanes in the U.S. Gulf Coast, I think what you see is what you're going to get for the balance of summer."
In other words, “this is probably as high as it's going to go, no more than $1.35 and as low as $1.21-$1.22, except for gas stations that have mysteriously decided that they can sell gasoline below cost.”
Why Saskatchewan prices are so low
The reason why Saskatchewan prices are a little lower than other provinces right now is “due to the fact that the wholesale prices aren't crazy. And gas stations don't take as much as they do in other provinces. In my province here in Ontario, the retail margin — that is the profit that gas stations allow themselves — is a little closer to $0.11 or $0.12 a litre, not $0.02 or $0.03 a litre like we're seeing in Saskatchewan.”
McTeague also points to a harmonized sales tax of 13 percent in many parts of the country, while Saskatchewan, Alberta, Manitoba, and B.C. only have 5 percent. “So that really makes a difference when it comes to the overall taxation and the effect it has on the pumps.”
The real outlier for gas prices, he said, is Vancouver with prices around 165 cents/L.
“The big difference there is taxation. Vancouver has the highest taxes by jurisdiction in North America, including a second carbon tax, which is about $0.19 a litre,” said McTeague. “No one talks about it, but it is out there… they also have something called the TransLink or transportation hub tax, which is $0.18 a litre. So all in all, at any given time, Vancouver can always be $0.20, $0.30 a litre more expensive than most other jurisdictions across the country.”
As for Saskatchewan, McTeague spoke of some reasons why prices at particular gas stations might be lower than others. He said those stations may have another way of making up the cost.
“It costs most gas stations today in Regina roughly about $1.24, $1.25 to buy your fuel. Now, that could come down a little bit as well. But if you're offering for $1.20, it means you're taking a haircut of $0.04 or $0.05 a litre,” McTeague said.
As for how to make it up, in the case of Messenger or Regina Cabs, "they may have a pump or two and that's it. They don't have the massive volumes. They probably make their money on cabs. And of course, they probably make a little bit more money because they don't move volumes the way that other gas stations do. So they may be locked into a price where they got the gasoline in their tanks back several weeks ago.”
Other gas stations can offer gas cheaper by making money on what they sell in store. “And that's where a lot of gas stations tend to make their money. If you think, for instance, a case of 24, 28 water might cost them wholesale no more than $2 or $3. But they're selling every unit for $2 or $3. You can see how when they get people going to the stores buying merchandise there that they're able to, or even food, they're able to make a lot of money. There's a lot of money margin on food and coffee and beef jerky and water versus selling gasoline sometimes. So that's how gas stations tend to do it.”
There is also what is called dealer support, where if the gas station is in a particular market where a traditional gas station is selling below cost, “then they're allowed to match it safe in the knowledge that they won't lose money when they buy from their supplier. The supplier will often understand the situation and help them in a temporary gas war. But there's no free lunch.”
McTeague also said gas stations can often make up the difference through the premium gas prices. “Even though it's only $0.16 or $0.17 difference at the wholesale level, gas stations in some parts of the country charge as much as $0.30 or $0.35 a litre. So they make up a lot of what they might lose selling regular gasoline on premium gasoline.”
Another reason for low prices: no consumer carbon tax
One more thing that those filling up at the pump can look forward to this summer is gas prices being lower with the federal consumer carbon tax being removed.
McTeague pointed to gas prices being “about 23, 24 cents a litre cheaper than they were this time last year. And that, of course, is one of the major reasons why fuel prices, energy prices this summer will be a lot more affordable than they were this time last year.”
That does not surprise McTeague, who said it is “not lost on folks like me who've been warning for years that that would have a cataclysmic effect on the bottom line, not just for fuel, but also for farmers, the price of food, for the price of just about everything.”
McTeague also pointed to Stats Canada noting inflation was down a second month in a row at the 1.7 range.
“That's a good thing and the reflection of the fact that maybe it wasn't such a bright idea to impose a weather tax on consumers that had no effect other than lining the pockets of some of our federal civil servants who did very well by this program. Thankfully, it's just been suspended. I just hope that we keep it that way.”
