Independent gas stations squeezed by price plunge, stay open at a loss

A Nova Scotia gas station owner is asking regulators for permission to hike the price at his pumps by one cent per litre to offset losses caused by sudden price plunges triggered by overseas oil production disputes and the COVID-19 pandemic.

Independent retailer Joe Jellow is the first to seek relief, claiming his three stations in eastern Nova Scotia have lost more than $60,000 in total since March 11.

He operates Petro-Canada stations at Monastery in Antigonish County, Aulds Cove at the Strait, and on Reserve Street in Glace Bay.

Jellow declined an interview and referred CBC News to the Retail Gas Dealers Association, which represents 140 independent owners operating 350 stations in Nova Scotia.

"They're in severe need. They really are," association executive director Shannon Trites said Wednesday. "I know of approximately eight closures over the last month. And those are independent in rural areas."

Regulator invites relief applications

On March 25, the Nova Scotia Utility and Review Board invited gas stations to apply for "relief" after dealers with old inventory purchased at higher prices claimed they were losing between 10 to 40 cents per litre sold.

In a letter to the Retail Gas Dealers Association, the board said it accepted that assertion, adding their situation has been worsened by lower demand caused by the declared state of emergency. Public health officials are asking Nova Scotians to stay off the roads.

The price of oil crashed last month after Saudi Arabia and Russia could not agree on production cuts. It prompted the review board to twice step in outside its weekly price adjustments and order further price drops at gas stations. In some areas, regular unleaded was selling for as little as 64.1 cents a litre late last month, down 40 per cent from a few weeks prior.

Under the province's Petroleum Products Pricing Regulations retailers must charge prices set by the board, but there is flexibility in order to maintain gasoline availability in rural areas.

The board's chief clerk, Bruce Kiley, said the rules "provide an avenue for applications to the board requesting relief in these exceptional circumstances."

The regulator is requiring applicants to file amounts lost on inventory, invoices, proximity to the nearest station and reasons why relief is needed to guarantee access to gas in rural areas.

Open at a loss

In his application, Jellow said the penny-per-litre hike "lessens the negative impact to business, allows to recoup some losses, while we continue to serve the community and pay wages."

Jellow asked to maintain the increase for six months in Monastery and Glace Bay, and for a year at Aulds Cove.

"Many of our retailers are staying open at a loss to themselves at the moment and they are doing so for the fact that they are an essential service," said Trites.

She said 25 percent of members responded to a survey on the impact of COVID-19. The respondents claimed to have collectively lost close to $750,000 during the last two weeks of March.

The association is encouraging owners to apply to let the board "understand the actual needs of our retailers at the moment."

Trites expects more owners to seek relief, but adding a penny a litre puts them at risk of losing business to corporate stations.

"Frankly, even if a retailer does access that Utility and Review Board one-time opportunity they still could price themselves out of the market, because as a consumer you do have the right to go to somebody with a penny less."