‘Puzzling’: Retail gas margins in Calgary are more than double the national average

.

Calgary gas prices remain high even as the fuel has started to trade at lower prices and experts point to retail markups as a key reason.

Announcement 2

.

Cheapest gas in Calgary on Friday according to gasbuddy.com it sold at Costco outlets for 147.9 cents per liter, while one of the cheapest non-Costco options was Safeway, which sold for 178.9 cents per liter. The average price in the city was 180 cents per liter. Meanwhile, the average price of gasoline in Edmonton was 175 cents per liter and Red Deer averaged 178 cents per liter. Several locations in southern Alberta trended similar to Calgary prices, while areas near Edmonton had prices as low as 167 cents per liter on average.

University of Calgary economist Trevor Tombe said the main reason prices remain high is that retailers have set high markups on fuel.

“Alberta as a whole, the retail margin for this current week through this morning is 38 cents a liter and nationally it’s only 16,” Tombe said. “Honestly, I don’t know what’s behind it. Basically now it’s fully absorbing the provincial tax cut.”

Announcement 3

.

Drivers line up at Costco on Buffalo Run Blvd. outside Calgary on Thursday.
Drivers line up at Costco on Buffalo Run Blvd. outside Calgary on Thursday. Jim Wells/Post Media

Earlier this year, the province introduced a tax break that eliminated the 13-cent-per-liter provincial tax on gasoline, while gas from West Texas Intermediate continued to command high prices. Premier Jason Kenney said at the time that the province would closely watch retailers to ensure those savings are passed on to consumers. WTI was trading around $95 a barrel on Friday, down from a high of around $123 a barrel in March.

Tombe said that while that relief measure appears to have worn off for the consumer, he said prices may have been even higher than what Albertans face now if that relief measure had not been introduced. She said the government should start exploring why the margins are so high and could improve data collection and reporting on gas prices.

Announcement 4

.

Gas prices in Calgary and Edmonton, compared to the national average, for the past six months.
Gas prices in Calgary and Edmonton, compared to the national average, for the past six months. Courtesy of Gasbuddy.com

“I think that’s the correct response from the government, not to jump to conclusions, but to gather more information here because it’s puzzling,” Tombe said. “It’s puzzling that some people’s knee jerk reaction that this is due to corporate greed or lack of competition doesn’t have much validity.”

The province did not respond to requests for comment Friday.

Tombe said he wonders if there are underlying market factors at play keeping margins high and that all it would take is one or two retailers undercutting the others to cause a ripple effect of lower prices.

Thomas Holloway, a senior instructor at the University of Calgary Haskayne School of Business, said that while gas prices are high, there are little things drivers can do to help keep their costs down. He said driving slower, shortening trips and driving less often are all things that can be done.

ad 5

.

“One of the things about gas prices in the short term is that you feel powerless. Last week you spent $20, this week you spent $25 and there is absolutely nothing you can do about it,” Holloway said. “That is what frustrates us the most, is that it seems that we have an inelastic demand. But about you, I think you know what I tried to remind myself of is that there’s some elasticity there.”

In addition to high gas prices, inflation and the cost of living have been rising steadily across Canada. Holloway said it’s hard to look at local inflation and relate it to gas prices, but the cost of fuel often gets that focus because it’s volatile and an expense people take on regularly.

“You know, there’s literally a big sign on the road with a number on it, so we’re very conscious of it, even if we drive by, even if we’re not filling up,” Holloway said.

[email protected]

Announcement 1

Comments

Postmedia is committed to maintaining a lively but civil discussion forum and encourages all readers to share their thoughts on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We’ve enabled email notifications – you’ll now receive an email if you receive a reply to your comment, there’s an update in a comment thread you follow, or if a user you follow comments. visit our Community Principles for more information and details on how to adjust your E-mail settings.

Leave a Comment