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Gas price ups and downs frustrate, relieve residents

Amid public frustration over the relatively high cost of gas in Burns Lake, this past week saw big changes in prices at the pump.
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Burns Lake gas stations reduced its gas price on Nov. 21 to $133.9 per litre, down from $142.9 it had been charging. All gas stations said the gas price is set from their head office and not set locally.(Blair McBride photo)

Amid public frustration over the relatively high cost of gas in Burns Lake, this past week saw big changes in prices at the pump.

https://www.burnslakelakesdistrictnews.com/home/husky-drops-gas-price-to-133-9-in-burns-lake/?fbclid=IwAR2rJT3UZh4v6n0oadFsk7jqkQTfDdpYsi8JlhoX4yrzd5rSFmHPsl-dI4s

On Nov. 21 Husky lowered its gas price to $133.9 per litre from $142.9, where the price had sat for months. The local Chevron and Mobil stations followed suit a few hours later.

Parkland Fuel Corporation, which owns Chevron, and the head office of Husky Energy both declined to comment on the reasons behind the gas prices.

However, the local manager of the Chevron told Lakes District News, “We do not control the price of the gas - we receive an email or a phone call from our head office and that is when the price changes.”

He added that he was not sure why the price of gas has been so high in Burns Lake as the village has been well known for years as having the lowest gas prices in the region.

“Our head office controls the price of our gas,” he said.

The owner of the Husky station, likewise, said gas pricing comes from the main office in Calgary.

Charlie Beck, operations manager with Four Rivers Co-op in Vanderhoof, and that outlet’s general manager Allan Bieganski explained that several factors determine prices at gas stations.

First there is the rack pricing, or the wholesale price the company pays to buy it.

“The market goes up or down based on the rack pricing, which is based on the price of crude,” Beck said.

Then there are costs to transport the gas from the refinery, such as in Prince George, to the local stations.

Finally there are the operating costs of the stations, “All those costs lead to what our price will be for the consumer. The cost to operate a gas bar is constantly rising with increases in property taxes, environmental standards, payroll, maintenance. The consumer doesn’t necessarily see those costs,” Bieganski said.

A situation Burns Lake faced on Nov. 21, with the fast drop in price might have to do with gas inventory in the station’s tanks, Beck said.

“Until they got their next delivery they couldn’t lower the cost, possibly. Especially if you’re a smaller business operator, sometimes they can’t afford to move the price down right away until you sell your inventory and get a new load at a new cost.”

The time it takes to go through inventory could be longer in a village like Burns Lake compared to a larger city like Prince George, where a gas station might go through its tanks every two or three days.

Dan McTeague, senior petroleum analyst with website GasBuddy, acknowledges that is a factor in pricing, but he suspects that profit is a bigger motivator for charging $142.9 per litre.

When a gas company buys from a wholesaler, like Petro Canada, there is the 68-69 cent base cost per litre, plus 10 cents in federal excise tax, about 22 cents in provincial tax, times 0.05 for goods and services tax.

There is also the 5 cents per litre it costs to transport the gas from the refinery.

The conservative figure of $1.10 is what it costs for the company to replace its gas inventory.

In a situation where the price rises to $142.9, other costs involved could be 10 cents for the stations’ overheads, and another 10 cents if they’re selling gasoline from two weeks ago, when prices might have been higher.

Still, McTeague said the gas station owners are doing well with that kind of margin.

“Selling gasoline at 30 cents higher than what it costs for them to replace it. The numbers show they’re making quite a tidy profit.”