Bye-bye 'Costco effect'
Big-box wholesaler's arrival in the west end hasn't led to gas price competition among area stations as residents hoped
Three months after Canada’s largest Costco store opened its doors in the Galway area of St. John’s, thousands of drivers from the northeast Avalon are routinely making the trek to get the best gas prices in the province.
“I’m thrilled to be saving a bit of money,” Rose Clarke of Mount Pearl told The Telegram while pumping gas for the first time at the new Costco location in June.
“It’s definitely worth coming here.”
As of Wednesday, the wholesaler’s gas price was 111.9 cents per litre — eight to 10 cents cheaper than at other gas stations in the St. John’s metro area.
That was before the Public Utilities Board — which sets maximum prices for all regulated petroleum products in the province — was set to increase the price of fuel by 0.8 cents per litre today.
When Costco was in its original location on Stavanger Drive, nearby gas stations in the east end lowered their gas prices significantly to compete.
And when Costco pulled up stakes and moved to Galway, many consumers assumed the same would happen in the west end.
But it hasn’t happened, and many people are wondering why.
“I’m just a small, independent business owner,” said Andrew Hallett, owner of Triple C Car Wash gas station on Old Placentia Road in Mount Pearl.
“But I try to compete with the multibillion-dollar company by offering other items and services.”
The price of gas at Hallett’s Ultramar station on Tuesday was 119.9 cents per litre — on par with the North Atlantic on Great Southern Drive/ Southlands Boulevard, Esso on Park Avenue, Canadian Tire on Merchant Drive and Irving on Commonwealth Avenue.
As of Tuesday morning, gas at the Ultramar and Esso on Commonwealth Avenue was 121.1.
Hallett’s said his gas station, which is closest to Costco’s pumps, has probably lost some customers since the big wholesaler arrived, but he’s likely gained some, too.
He said his station and shop offers many things Costco’s gas station can’t — from homemade soup and a car wash service to 25th-anniversary giveaways and perks from its Valumax program, where customers can get up to six cents a litre off on regular and eight cents off supreme-grade gas on Wednesdays and Thursdays.
As well, the roundabouts at the top of Old Placentia Road, leading to Galway, deter some drivers. Hallett figures many people choose to gas up at his station to avoid the hassle.
“I honestly think the roundabouts keep more people in Mount Pearl,” he said.
When approached by The Telegram Tuesday, staff at the other major gas station chains — including Esso, Ultramar and North Atlantic — all referred questions to their head offices.
Messages left for head-office representatives at Irving, North Atlantic, Esso and Canadian Tire were not returned by Wednesday.
Meanwhile, in the east end of St. John’s, with Costco gone from the area, the cost of gas has risen to standard prices. Most were at 121.5 on Tuesday.
Gary Stokes, manager of the North Atlantic gas station on Torbay Road, near Stavanger Drive, said Costco’s move to Galway has been good for his business.
“People who live in the east end who went to Costco for their gas are obviously not going to Galway to get it, so they’re coming back to us,” said Stokes, who noted business at the 50-year-old station on a busy strip has always been good.
He said the dip in prices when Costco was in the east end was triggered by one station — he’s not sure which — and that compelled other stations to follow suit.
“We raised it back up now to what it’s supposed to be because all the while Costco was here, the prices were artificial (in the area),” Stokes said.
He said that by having staff to pump gas while drivers sit in their vehicles, his station can offer something extra for customers.
“That’s something people really like,” he said. “Cheaper is not always better.”
Derek Hayter — manager of Newfound Cabs, which took over Valley Cabs last year — said Costco’s cheaper gas prices don’t always draw his drivers there. He said while drivers need to fill up daily, most don’t bother to take the extra time or go the extra distance to get to the west end.
“It’s fine if you’re in the area or if you live in Southlands, but it makes absolutely no sense if you’re in the centre of town (near the company’s home base on Thorburn Road) to trek all the way to the west end in the middle of rush hour to get gas,” said Hayter, adding 23 of his company’s fleet of 110 cars are based in Mount Pearl.
“The money you’d save, you’d burn to get there,” he said.