Consumers loving it but gas stations losing money at current price
If you woke up from a coma today and the first thing you saw was the price of gas — you might just think you’ve gone back in time.
Gas Buddy’s senior petroleum analyst Dan McTeague says gas stations are losing money on the low price of gas but are doing it because they have to stay competitive.
“It’s one of those rare times where it’s great to be a consumer,” he said. “It’s cut-throat competition and places are selling gasoline at four or five cents under what it costs them to replace it.
“Big box stores that own their resources aren’t going to be feeling this too much, but standalone stores would be feeling this a lot and they better be selling a lot of beef jerky.”
McTeague says gas costs around 93 cents per litre meaning a loss of roughly five cents per litre sold. He says he is not sure how long the price will last.
“I really can’t say how long these companies will be selling gasoline and losing money,” he said. “It looks like everyone is fighting for market share and news broke recently that Husky is looking to get out of the gas station business — that’s a telltale sign they’re probably tired of selling gasoline and losing money or getting peanuts for it.
“Consumers can enjoy this while it lasts, but it’s always important to remember that there’s no such thing as a free lunch.”
McTeague says the big box stores are able to make up for the loss in different ways — including spiking the price of diesel.
“If you look at a place like Costco, people may be saving money on gas, but where are they getting hit inside of the store?” he said. “Diesel isn’t costing stores what they’re selling it for. On a day like today (Thursday) diesel costs about $1.12 per litre, so right there is where you can see some of the loss in regular gasoline being made up.”
Gas prices have reached below 90 cents recently and an industry expert says stations are losing money on gas while trying to make some of that back on diesel.