CORNWALL – Cornwall drivers that believe they are paying too much for gas here when looking at Ottawa prices don’t realize there’s a gas war in the capital, according to Ontario’s gas price analyst.
Dan McTeague, senior petroleum analyst with gasbuddy.com, told Cornwall Newswatch, in fact, we’re “getting it good” when it comes to the price at the pump.
The large discrepancy in prices between Cornwall and Ottawa is part of a price war.
“Esso and Ultramar (in Ottawa). Those are the ones that are duking it out. Those are the only people that can do that,” McTeague explained. He said those retailers are able to buy gasoline from their own “upstream” below wholesale or they get “dealer support”, which in turn puts a squeeze on small independent stations.
“A lot of that (the gas prices in Ottawa) tends to be below cost. It’s pretty hard to sell gasoline below what it costs to buy the gasoline,” McTeague said.
“You drive to Ottawa, how would you like to be told that from now on we’ll pay your gas to get to work but we’re not paying your salary? That’s exactly what’s happening to a lot of gas stations and the people doing it happen to be what’s left of the big three (oil companies).”
Based on Tuesday’s rack price, when you add federal excise tax, Ontario road tax and HST, the cost to buy gasoline for a retailer is 77.6 cents a liter.
“I feel sorry for gasoline retailers in Cornwall at 81 cents a liter,” McTeague said. He explained that when 77 cents a liter wholesale, plus two cents if people pay by credit card, the retailer is making almost nothing. “You can’t run a gas station on one cent a liter.”
“You’ve got some pretty darn good pricing, fair effective pricing, given that there’s no competition at the wholesale refinery level.”
He said the retail margin in Toronto is 10 cents a liter, no compromise.
McTeague said he warned people years ago about losing competition. “I don’t have to do very far. Look at what happened to the OLCO wharf, the Kaneb wharf right in your own back yard.”
He said the wholesale price of gasoline is expected to drop 1.4 cents a liter tonight (Tuesday) but it will largely have no effect on the price at the pump in Cornwall.
“That’s what it costs gas stations in Cornwall, in Ottawa, in Brockville. That’s what all stations pay between 77-78 cents a liter before you can turn on your pumps,” McTeague said.
With gasoline Tuesday around 80.6 cents a liter, McTeague said retailers will be struggling with a limited margin of profit.