The price at the pump isn’t only dependent on crude oil prices

Gas price depends on competition

NANAIMO – Lower cost found across Vancouver Island.

With crude oil prices generally dropping, the price of gas seems to be following suit but there seems to be a rate discrepancy across Vancouver Island.

When the price of gas in Nanaimo was $1.219 a litre between Nov. 20-21, it was $1.109 per litre in Saanich, $1.189 in Duncan, $1.199 in Port Alberni and $1.159 in Courtenay.

The variation hasn’t gone unnoticed. Longtime Nanaimo resident Bill Block travels frequently to the cancer clinic in Victoria and in the last three weeks, he’s noticed gas in the capital city is usually seven to 10 cents cheaper.

“Like [Nov. 21], I filled up in Victoria for $1.109. Well in Nanaimo, it was $1.219 – somebody’s gouging us here,” said Block. “I know there’s profit to be made and people should make a profit, just the same, I still think somewhere here in Nanaimo, they’re being a little greedy about it and I always wondered why we never seem to get a price break here.”

Gasbuddy.com Canadian senior petroleum analyst Dan McTeague, former MP and chairman of the 1997 Liberal committee on gasoline pricing, said the price at the pump isn’t only dependent on crude oil prices. Refined price and margins, retail margins and taxes are also factors.

McTeague said there isn’t as great a level of competition amongst retailers in Nanaimo as there is in Victoria and that is part of the reason for price discrepancy. Not as much gas is sold in Nanaimo, so it can have a much “skinnier” margin. In fact, he said Victoria is the polar opposite. It is so competitive it’s cutthroat.

“You’re looking at a very different market and I suspect that the one thing that tells me why the prices are much lower there is the presence of the large players … particularly Costco. It’s Costco that’s the price leader, so as people are looking for just the cheapest price, others are prepared to drop their numbers,” said McTeague.

“Prices have been high, they’re coming down. It’s obvious that in Nanaimo you have room for further cuts in fuel prices and I would suspect the longer the depressed crude prices exist, in considering markets further south, where you have prices that are 12, 10 cents cheaper, even with the tax differential, only three or four cents, there’s still room for some changes,” he said.

Adrien Byrne, a Chevron spokesperson, also said competition is the reason why prices differ from areas like Victoria and Nanaimo.

“There’s less competition in Nanaimo and than in Victoria,” said Byrne.

“We actually don’t make a whole lot of money in Victoria because it’s that competitive but there are some additional players in the market in Victoria as compared to Nanaimo, which tends to keep prices up in Nanaimo a little bit.”