Don’t Say We Weren’t Getting Gouged
Saturday, November 9, 2013 @ 4:47 AM
Prince George, B.C. – A person well-versed in the Canadian petroleum industry says there is no doubt about it, Prince George motorists have been getting hosed at the gasoline pumps for many years.
Petroleum expert Jason Toews, who is also the Co-founder of GasBuddy, says the arrival of the gas bar at the Costco outlet here has brought gas prices down to a more reasonable price from the highs experienced before the pumps opened at the big box store in September. Costco opened at $129.9 a litre at a time the going price throughout the market was $135.9. Costco has continued to bring its price down ever since. Toews says “First off, Costco does not lose money selling gasoline. What’s been going on in Prince George is that the gas stations have been making a lot of money off gasoline.”
“It’s something that we’ve seen lots around the country. I’m in Regina and we saw the same thing last year. Costco opened a gas station and all of a sudden all the gas stations started lowering their price. We’ve seen it in Victoria, Courtenay, Kamloops and it’s come into Prince George now where you’re actually getting a reasonable price now.”
But what about the claims, heard for years here, that the gas outlets had to charge the higher prices and, even at that, were only making a penny or two a litre? If that was the case wouldn’t they be operating at big losses with a 21-cent-a-litre drop in price since Costco arrived? Toews says “That’s not true at all. It only takes maybe, depending on where the refineries are where they’re shipping the gas in from, it only takes between one to five cents per litre to transport the gasoline. It certainly doesn’t cost five cents to get it to Prince George. But they still are making money off gasoline and they were making a lot more off gas before Costco came to town. They absolutely are making money. You know Costco doesn’t do any business without making money off it and gasoline is not a loss leader for Costco. They’re not making a whole lot of money off (the current price of) $112.9 right now, but they’re not losing money off gas.”
Toews fully agree that we were getting gouged. “Ya I would call it a form of gouging. And it’s hard to feel sorry for these oil companies too. They announce regular level profits and if its not billions and billions of dollars they’re hurting, and we’re having to pay for it at the pumps. Some of these gas stations will make 15 or 20 cents per gallon. Now it depends on the time of year. In spring when gas prices are rising they typically don’t make quite as much money off gas compared to the fall, when they make their highest profits.”
As far as product being refined right here at the Husky refinery Toews says “Well the crude oil would come from elsewhere so there is some transportation cost there, but it’s not significant, not enough to move the price of gasoline up 10 or 15 cents per litre.”
Toews says credit cards do cut into a gas station’s profits. “If you use a credit card to buy gasoline they have to pay two or three percent to the credit card companies, so that cuts into their profits a lot. One thing about Costco is they don’t accept credit cards, except for American Express, but they have a special deal with American Express. So their cost is a little bit lower because they don’t accept credit cards which these other gas stations do. So if you have an S-U-V, then two to three dollars on a fill would go to a credit card company. But even after that they’re still making money off gas.”
Toews says “when the wholesale cost is rising in the spring, the gas dealers typically don’t make much money then. When the wholesale cost is going down, it goes down much more quickly than the retail price” and profits increase. “Before Costco was around, why would a gas station lower their price? The only reason to do that would be because they needed more customers. If they don’t think they’re going to get more customers coming in, why lower the price? They won’t do it.”
On the age-old issue of collusion among the oil companies Toews says “if one brand raises their prices and all the other gas stations in the city see that and raise their prices too, that’s not collusion. That’s how they get around it. They don’t agree to set the prices, what happens is one brand is the market leader and when they raise their prices everybody else copies them, which is not illegal to do. It’s frustrating because in that case it’s us, the motorists, who have to pay for it.”
Comments
Now if Costco brings in a diesel pump as well I sure hope it has the same effect. I’m sure it will. The companies who operate keylock or cardlock fuelling stations are a lot more competitive when it comes to their pricing compared to normal gas stations. Check out their prices, you’ll see.
Costco will never have diesel pumps!
If I remember a previous article on gas prices, for every cent the gas companies raise the price it means 1 million dollars a day clear profitfor them.
glad to see they aren’t making $21 million clear profit any more.
We’re still getting gouged in Quesnel, what about giving us a break here too!
Do we need to et a costco store, and gas bar here too?
Fight the gouging, use less gas, LOL.
Should show this to a certain gas station on the Hart!
Esso must have some sort of deal with fleet vehicles or something because their prices are still at 123.9. And I still see people over their getting gas, so it’s either a company paying for the fuel or people are just so ingrained into what they do. 123.9 at opposed to 112.9 is $11.00 difference on 100 litres of gas, quite significant in my books.
Uturn. Quesnel up until a few years ago always had cheaper prices for gas than Prince George. For some reason they increased them to the same as Prince George.
Thank you Costco. When you opened your gas bar everyone slashed their prices. Yes we did get gouged for many years, that is why I will not support the other gas stations because they only changed when Costco opened. We would still be paying 134.9 and let’s not kid ourselves
Thank you Costco. When you opened your gas bar everyone slashed their prices. Yes we did get gouged for many years, that is why I will not support the other gas stations because they only changed when Costco opened. We would still be paying 134.9 and let’s not kid ourselves
Diesel went up 10 cents on the eve of Costco coming to PG, 5 cents the day of. Guess they are getting their profit back by the amount of diesels around town and the province, not to mention commercial.
Vancouver is 121.9 with the 15 cent transit tax…think we are still paying all over BC for their transit
Before Costco came to town Overwaitea, the Stupidstore and Safeway closed at 6PM every night. Costco came and everyone stayed open until 9PM. Costco came with a pharmacy. Guess who has pharmacies? Everyone. When Staples came to town that sure made SpeeDee printers smarten up. Same with Papyrus. All it takes is a little and some real competition.
Yes, those of us who buy diesel are really getting gouged now at an average of $135.9, the present price at Canadian Tire. Super Save seems to be the lowest, last time I was there at $132.9. The highest I have seen is Petro Canada, on West Austin Road, on the Hart at $138.9.
Does anyone know why Costco will not sell diesel?
@Honestjoe – Straight from Costco.com “Costco only stocks items that we can sell in sufficient quantity to bring a value to our members. The relatively small number of diesel passenger vehicles does not provide the volume needed for us to sell diesel.” http://www.costco.com/gasoline-q-and-a.html
Unless things have changed recently, I don’t find a lot of the information in this article accurate or credible. Most gas station owners are independent franchisees. They have no control over the price of the fuel they sell. I believe it’s dictated to them by the people who are marketing the fuel to them; the oil companies. Unless something has changed, that’s the way it works. The price the stations are required to pay for and then sell the product has a very tight spread. The stations don’t make much money on fuel. They make all their money on snacks and cigarettes.
If what the various oil companies were doing in this town wasn’t collusion, then I don’t know what, but tacit collusion is still collusion. Now I don’t know who is supplying Costco with its fuel, but that would be a very useful and interesting piece of information. The cash only policy speaks volumes too.
Don’t blame mom and pop gas bar operators, I truly think they had no say in the matter until now. Lay the blame where it belongs, further upstream.
I personally refuse to shop somewhere that charges a fee to shop there. I don’t think buying their particular brand of crap benefits my community. I don’t begrudge people their own “choices,” but I don’t support big box retail. I do appreciate the change in price though, but I still patronize the same old shops that I used to. I won’t be ponying up $50 any time soon for the right to shop somewhere.
Thanks for the information, verballabel. Costco markets their products in a huge area as I noticed in the questions and answers through your link. Prince George has a lot more diesel powered vehicles than a typical North American city but their marketing policy does not make exceptions for a place like PG. Now the owners of diesel-powered vehicles in PG will be the ones being severely gouged. Enough said.
In some European countries diesels make up more than 50% of all vehicles on the road. Once we realize how much more fuel efficient they are and start buying them instead of staying with the same old gasoline things will change at the stations.
Diesel fuel contains more energy and can increase mileage by 30 percent so perhaps gouging is not as bad as we believe. Do the math.
in VancouverUnless things have changed recently, I don’t find a lot of the information in this article accurate or credible.
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You got that right Sine Nomine. Gas prices have dropped acroos the province. Here in Abbotsford gas prices hang around $1.15 per liter. At the present time Costco gas here is$1.13 and they take all credkt cards.
Last spring when gas in PG was $1.30 the cost was $1.54 in Vancouver So stop crying and look what the facts are.
Im pleased to hear that Costco isnt selling diesel fuel. If you want to drive a big polution machine you have to pay the price.
Cheers
Sine Nomine. The $50 per year to shop at Costco amounts to approx. 13 cents per day. So whats the problem. You can get this money back very quickly just through your gas purchases. In addition Costco has their own credit cards, and gives you a 1% rebate on your total purchases on a yearly basis. I have a Costco card, however whenever I can I support local business, even though it costs me more.
I think the oil companies pay the service stations a set price per gallon (litre) so that no matter what the price of gas is, the service station gets the same amount. If this was not the case then they would all go broke. Eight to 10 cents a litre comes to mind.
If nothing else Costco keeps the other business’s from really putting it to us.
I get my $50 dollars back from Costco by eating lots of free snacks.
From now on anytime I’m heading to PG I put in a safe amount of fuel to make the trip and fill up in PG. Were getting gouged pick time in McBride at 129.9. The average provincial price is around 1.24. Used to be the Husky here kept their price within 5 cents of PG. Not anymore now that Costco has set up shop.
Absolutely no doubt that Prince George residents, and those in the surrounding areas have been gouged by the oil companies for years. This gas is refined in PG, and therefore the transportation costs would be much less than to stations in Mcbride, MacKenzie, Quesnel, etc;. Costco has basically shown the true picture for gas. Not only in Pr George but in other Cities.
We and the surrounding areas are also getting gouged by other industry, ie; 2% Hotel tax for shoppers who come to town and spend money, and of course the higher price for vehicles. There are more but you get my drift.
I don’t call this City Prince Gouge BC for no reason.
Most stations make between 1 and 2 cents a litre on fuel. We looked at buying the PetroCanada when it was for sale and the revenue from the store was equivalent to the gas bar. 8 to 10 cents a litre and we would be in the fuel retail business right now.
Slinky. The revenue from the store was the same. If the revenue from the store was equivalent to the gas bar. (But far less labour intensive) then either both are not viable operations, or the gas bar is superior to the store.
I agree that the people who run the service stations are being gouged the same as everyone else. They basically are cheap labour for the oil companies.
The day will come when all fuel will be sold in stand alone stations. People will serve themselves, there will be no stores, and if you do not have a credit card you will have to buy a gas card from places like Shoppers Drug Mart, the same as some people do for phones.
That’s the future in the gas business.
I am pleasantly surprised by Costco’s presence, but at the end of the day, gas companies do not owe us cheap gas. We all love our gas guzzling 4x4s in PG.
If you don’t like the prices, use less gas or buy a more efficient vehicle. It is that simple.
“Prince George has a lot more diesel powered vehicles than a typical North American city”
I would actually disagree. As a percentage of vehicles on the road, perhaps, but on a total number of vehicles within a particular city, I would say no.
Take a city like Vancouver. There are probably more construction contractors driving 1 ton trucks with diesels than there are total diesels on the road in PG. That’s not even factoring in the other commercial vehicles, the European cars that aren’t in the PG market, etc.
If Costco can’t make diesel work in the largest cities in Canada, it’s highly unlikely it could ever work in the smaller centres. It’s a volume and return on investment game for them.
No doubt about it, Big Oil & Gas has been raping our purses and wallets for quite some time. Now they have taken over our provincial and federal governments, as witnessed by this story:
http://www.ctvnews.ca/canada/b-c-gov-t-under-fire-after-leaked-documents-hint-at-land-reserve-overhaul-1.1533379
No big surprise that it would be the BC Oil and Gas Commission that would oversee industrial use of agricultural land reserves hey?
What gets me is that these documents had to be “leaked” in order for us (the general public) to know this was being planned… but that’s the way Big Oil & Gas operates!!!
Time to wake up sheeple!
You seem to have quoted the wrong article. I didn’t read anything in there about oil and gas taking over the government.
Hmmmm.. and how did that fella who said there was no Collusion …..must have got a life card from?
God bless costco…
Sheeple alert – drink!
I suggest Costco put in one diesel pump and see what happens. I bet 80-90% of the small diesel owners (not the semi trucks — they’re already caught by the short ones big time and know it, but have no choice but to bend over and take it), will boycott the service stations regularly selling diesel at about a buck a gallon more than it should be all over the city like they were handing out doses of the clap !!
Diesel is huge in Europe because of its extended mileage capabilities and economy, and will slowly begin to increase in popularity over here as well, providing Big Oil doesn’t quash it by continuing to rape the big rig truckers (because they can), and keep the price for diesel at blatantly gouging levels.
Oh, and by the way, all the latest diesels including pickups and SUV’s, now have to have have DEF reservoirs, which cleans up the exhaust, and they do not pollute the environment as they did in the past.
Its the law now, and I for one, am happy for it.
Costco won’t put in a diesel pump here because they don’t have it at any other station in Canada. Ain’t gonnahappen.
So you don’t have a credit card that charges an annual fee Sine? Oops forgot about that did ya?
Spend the 50.00 then sign up for the No fee Amex Costco cash back card and you will ahead of what most banks annual fee for their card is. The membership fee is insignificant compared to the savings.
Signup for the executive card at Costco. It gives you cash back. In the 7 years that I have had it I have never had to use my own money to renew my membership, I’ve always gotten more than enough cash back to cover the membership and something else for me.
Thanks to Costco – many employees in the PG has not received a raise in pay but Costco has given them a raise in their fuel prices. I for one will not be supporting any other fuel outlets due to the fact the prices were never lowered.
Signup for the executive card at Costco. It gives you cash back. In the 7 years that I have had it I have never had to use my own money to renew my membership, I’ve always gotten more than enough cash back to cover the membership and something else for me.
Signup for the executive card at Costco. It gives you cash back. In the 7 years that I have had it I have never had to use my own money to renew my membership, I’ve always gotten more than enough cash back to cover the membership and something else for me.
“In some European countries diesels make up more than 50% of all vehicles on the road. Once we realize how much more fuel efficient they are and start buying them instead of staying with the same old gasoline things will change at the stations.”
Maybe when they stop charging 10 times the price for parts people will buy them more readily. The common reason was that diesel engines last much longer and parts wear out less frequent, but gas engines rival diesel for longevity now, so that is no longer a viable excuse.
Don’t see any write-ups about the high fuel prices in the local paper . This city wants more tourism but due to the high price of fuel this has kept vistors away.
The local car / truck dealerships should become involved with the high price of diesel fuel. It will be much harder to sell a diesel vehicle with such a wide gap in the price of fuel.
My diesel truck does just over 650km on 100 bucks at the price it is now around town. I have to plunk in my 100 bucks once a week like clockwork. Not sure what that works out to but not bad for a 3500 crew cab, couldn’t even come close with my gas pot
Not defending oil companies but people keep stating they make billions in profits but ignore their operating costs. Exxon for example made roughly 10 billion in profits but on an operating cost of 100 billion. Is that obscene? A 10% profit.
Esso is one of the reasons why gas prices are so high in this country. Most of the Esso stations in PG are still over $1.20. Do the math !
Esso is one of the reasons why gas prices are so high in this country. Most of the Esso stations in PG are still over $1.20. Do the math !
More details please
“Exxon for example made roughly 10 billion in profits but on an operating cost of 100 billion. Is that obscene? A 10% profit.”
Depends. If it is gross profit before reinvesting in exploration, research, etc. …. no
If it is net profit after reinvesting in infrastructure, exploration, research, paying off any past and present debt, paying any dividends, and even taxes ….
You betcha it is an obscene profit!!!!!
Exxon is not some second rate small contractor in PG that does not know how to calculate overhead and understand the difference between gross and net profit and after tax profit and simply pays the owner from the profit through periodic draws over the year rather than an actual salary.
Oh lighten up and keep it simple. How about Gore’s 300 plus million now that’s obscene.
Simple? … simple is as simple does …..
How about a baseball player’s annual salary of $15 million? …. now that is obscene.
Exxon return on equity ….. A truer measure of so-called profit in my world.
20.48% for Sept. 30, 2013
http://ycharts.com/companies/XOM/return_on_equity
For comparison, Canfor return on equity
8.42% for Sept. 30, 2013
http://ycharts.com/companies/CFX.TO/return_on_equity
Three highest gas prices in BC
142.9 Shell Tumbler Ridge
142.9 Fas Gas Tumbler Ridge
136.9 Esso Lillooet
Lowest
112.9 Costco PG
112.9 Superstore PG
113.9 Safeway, Mission
113.9 Esso, Mission
So, Esso is both with the lowest and the highest in BC.
Abbotsford Costco = 115.9
Abbotsford Esso = 116.7
I can see why Esso is one of the reasons why gas prices are so high in this country ….. or can I?
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