"Big oil" exiting gas station business, study shows

Annual study also reveals a continued drop in outlets operated by integrated refiner-marketers and a continued decrease in the number of retail fuel sites in Canada.

LONDON, ON, May 20, 2014 /CNW/ - According to a recent survey of Canada's retail gasoline facilities by petroleum consultancy MJ Ervin & Associates, Canada's gas stations are increasingly becoming divorced from the crude oil producing and refining sectors that have traditionally maintained a "well-head to gas tank" vertical integration of assets and operations.

The total number of retail gasoline stations in Canada stands at 11,849 as of December 31, 2013 or 3.4 gas stations for every 10,000 persons; this represents a continuation of a downward trend since 1989, when over 20,000 stations existed. "We have seen virtually no increase in the retail gasoline margin in over 25 years" states Michael Ervin of MJ Ervin & Associates. "Retail gas stations are no longer seen as a strategic asset for integrated oil companies", since refiners typically have ongoing gasoline supply agreements with several third-party retail chains who themselves do not operate refineries.

Only 15 percent of Canada's gas stations come under the direct price control of the three major oil companies (Shell, Suncor and Esso), although their brand names appear on 37 percent of all gas stations, many of which are price controlled by the local dealer, or by a regional marketer holding the rights to use the major brand on its sign and pumps.

As of December 31, eight integrated refiner-marketers operated in Canada, representing a total of 13 refineries across the country (this does not include the Valero refinery in Quebec). During 2013, the number of integrated refiner-marketers declined from nine to eight, with the split of Valero, the owner of Ultramar, into separate refining and marketing companies. By contrast, there are over 60 petroleum marketers in Canada who do not operate refineries, and over 90 distinct "brands" of gasoline.

These "non-refiner marketers" represent 81 percent of Canada's retail gas stations, up from 70 percent in 2006, and reflecting a shift in retail gasoline ownership from refiners to non-refiners. A growing segment of this sector is the "big box" retailer, which has proliferated over the past decade and through competitive pricing and other incentives, has contributed to the overall decline in "conventional" gas stations.  

The study, entitled the National Retail Gasoline Site Census 2013, is a research project by MJ Ervin & Associates and is the only comprehensive enumeration of the number of retail gasoline stations in Canada.

MJ Ervin & Associates (a division of The Kent Group Ltd) is a London-based consultancy specializing in the petroleum refining and marketing industry. MJEA publishes the Weekly Pump Price Survey, Canada's authoritative source of petroleum prices (available at no cost on our web site www.kentgroupltd.com). Our clients span a wide range of government, NGO and industry organizations with an interest in downstream petroleum issues. A full description of our consulting services is available on our web site.

SOURCE: MJ Ervin & Associates

For further information: contact Michael J. Ervin at 519-672-7000 ext 111, or Jason Parent at 519-672-7000 ext 112.

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