Who controls gas stations – and gas prices? The answer may surprise you

Sep 29, 2016   | Categories: Economy, Energy, Fossil Fuels, Fuels, Issues
There was a time when most gas stations were owned by the oil refiners who produced the fuels that power our cars.

That has not been the case for many years, and the trend toward independent gasoline and diesel fuel retailing continues.
In fact, only 19 percent of today’s stations are controlled by refiners – down from 32 percent in 2004, says the 2015 National Retail Petroleum Site Census, a research publication by The Kent Group Ltd. The remaining 81 percent are independents, all of whom control their own gasoline prices.
Those independents are made up of 71 distinct retailing groups, large and small, including a number of grocery chains and big box stores. Within those groups, 5,900 individual outlet operators and distribution companies sell 97 distinct brands of gasoline.

“Sites are increasingly independent of refiners, and many are moving towards a model where the retailer owns and operates their site independently -- also making them responsible for setting their own prices,” said Jason Parent, Vice-President, consulting for the Kent Group.

Separating the oil refiner from the gasoline retailer has led to “a significant amount of diversity in price control in most markets across Canada,” said Parent.
“This often translates into varied pricing strategies among the players in a market and can lead to downward pressure on margins.”
Parent said technology has also had a role to play in this change, by turning consumers into informed buyers.
“They can get detailed site-by-site price information from a number of online resources, which can heighten the competitive pressure on market participants.”

Number of stations on the decline

Partly as a result of this market pressure, the number of stations is, over the long term, declining.
As of the end of last year, there were 11,916 retail gasoline stations in Canada, or about 3.3 outlets per 10,000 people. It was the first survey since 2005 showing a small increase in the number of stations, which has declined by almost 20 percent over the last decade.
There are several reasons for this change in retail direction. One is that gasoline mark-ups are quite low, forcing retailers to offer other amenities to consumers. A gasoline-only station is becoming a thing of the past.
“Generating revenue from the backcourt (other amenities such as car washes and convenience stores) is increasingly important for the viability of retail fuel sites, and so independent marketers/operators with a real convenience focus have an advantage in the marketplace,” Parent concluded.
Learn more about who’s pumping your gas and about gas prices in Canada in our previous blogs.
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