Annual study also reveals a continued drop in outlets affiliated with
integrated refiner-marketers, lack of growth in the "big box" sector
LONDON, ON, May 10 /CNW/ - The number of retail gasoline outlets in
Canada continues to decline, according to a recently released annual
survey of retail gasoline facilities by petroleum consultancy MJ Ervin
& Associates. The annual study, entitled the National Retail Gasoline
Site Census 2010, is the only comprehensive enumeration of the number
of retail gasoline stations in Canada. It identified a total of 12,710
retail gas stations as of December 31, 2010; a continuation of a
downward trend in the number of retail gasoline stations in Canada
since 1989, when over 20,000 retail outlets existed. The 2010 outlet
count represents 3.7 gas stations for every 10,000 persons in Canada.
This trend reflects an average decline of about two percent per year,
over a period of time when Canada's population, has been steadily
growing. "This is a consequence of a continued lack of profitability in
the retailing of gasoline", states Michael Ervin, the vice president
and director of consulting services for MJ Ervin & Associates (a
division of The Kent Group). Despite generally healthy oil industry
profits over the past several years - at least until recently - the
retail sector has always been a relatively poor performer: in 2010, the
wholesale "rack" to retail mark-up on a litre of regular gasoline was
less than seven cents per litre at a typical urban gas station,
according to pump price statistics gathered by MJ Ervin & Associates.
Ervin notes that to be profitable, retail gasoline outlets must sell
high volumes of gasoline in order to compensate for the low margins.
They must also be effective marketers of pop, chips, car washes, and
other non-petroleum offerings that tend to have much higher margins
than gasoline. "It's the stations that lack sufficient fuel sales or
sufficient non-petroleum sales that are closing", Mr. Ervin adds.
The study reveals that growth in "big box" retailers of gasoline such as
Safeway and Loblaws, has stalled in the past few years. This category
of petroleum marketer had proliferated in western Canada over the past
decade, but had only seen limited growth in eastern Canada. The study
suggests that a combination of low profit potential and some regulatory
constraints may be responsible for limiting big box retailers from
further expansion in the future.
The percentage of retail outlets affiliated with refiners declined from
42.5 in 2008 to 41.4 in 2010, evidence of a continued strategy of
refiners divesting retail assets at a faster rate than non-refiner
marketers. Conversely, non-refiner marketers (sometimes referred to as
"independent" marketers) were affiliated with 58.6 percent of all
outlets in 2010, compared to 57.5 percent in 2008.
As to the all-important question of who controls the retail pump prices
at Canada's 12,710 gas stations, the study determined that 16 percent
of gasoline stations are price-controlled by one of the three "major"
oil companies (Imperial Oil, Suncor, or Shell), while the majority of
gasoline outlets in Canada are price-controlled by dealers or companies
who are not involved in the refining of petroleum products.
The MJ Ervin & Associates report paints a picture of the diversity of
gasoline brands, with over 99 different brand names under which
gasoline is sold in Canada, although most of this country's gasoline
originates from 15 refineries, operated by nine refining companies.
There are over 71 companies involved in the retail management of these
The National Retail Gasoline Site Census is a research project of MJ
Ervin & Associates. A full copy of the report can be downloaded free of
charge at: www.kentmarketingservices.com
MJ Ervin & Associates (a division of The Kent Group) 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.kentmarketingservices.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 The Kent Group
For further information:
contact Michael J. Ervin at 519-672-7000 ext 111, or Jason Parent at 519-672-7000 ext 112.