Gas stations selling under $1.52 are taking losses and making money elsewhere, says expert

With gasoline prices varying widely across Calgary, an expert says some gas stations are trying to remain competitive by selling fuel below cost and attempting to make up the difference elsewhere.

In Calgary, the cheapest prices as of Thursday were found at the Costco gas station along Buffalo Run Boulevard at $1.52 per litre followed by two Tempo locations at Bow Trail and Dalhousie Drive at $1.54.

It costs gas stations between $1.60 and $1.61 to replace the fuel they’re selling.

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Prices under that threshold either have discounts from suppliers or charge higher prices for products in stores, premium gas and diesel, said Dan McTeague, president of Canadians for Affordable Energy.

“So depending on the price you see, you can pretty much judge what the difference is,” he said. “And if the difference is $1.72 per litre, then that’s considered a 10 cent retail margin with a little bit of GST in there, which is pretty much normal.”

The fuel rack price in Calgary sat at 139.6 cents on Thursday. If gas stations only tacked on the 13-cent provincial tax, they would be selling fuel at no retail marking of $1.52 per litre, he said.

Although predictions can be made about the market by monitoring the price of wholesale fuel, there are factors at play beyond the pump.

“I used to refer to this many years ago as ‘gas bar shenanigans,’ where they try to outdo each other, outwit each other by losing money selling gasoline and making more money selling pop, chips and smokes,” McTeague said. “That’s not a way to run a business and that’s one of the reasons a lot of these gas stations either fail or have been taken over by large, competing stores.”

One example is Imperial Esso, as they have either sold their gas stations or convenience store portion of their services to Circle K, McTeague said.

Gas stations are becoming draws for small level of groceries and products, he said.

They also make money from the price differences between premium and regular gas.

Looking at Edmonton, wholesale gasoline was at $1.33 while premium was at $1.57, meaning they would be able to sell premium at a difference of 33 cents to help subsidize losses, McTeague said.