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Watching the price at the pumps skyrocket this year, you might think it’s a good time to be a gas station owner. But in Nova Scotia, retailers say it’s never been harder to make a buck selling gasoline.
“The higher the price of fuel, the less money our retailers make,” said Michelle Veinot, executive director of the Retail Gasoline Dealers Association, in an interview.
In Nova Scotia, gas retailers make money on a fixed cents-per-litre basis, but many operating costs are percentage-based, including credit card fees, franchise royalties and delivery surcharges. Veinot said this framework means that as gas prices rise, profits are correspondingly eroded.
The gas dealers association recently asked the Nova Scotia Energy Board to adjust the way it calculates the price at the pump to account for the rise in global fuel prices and other inflationary pressures. This week, the regulator agreed.
It means that when the board calculates the pump price each week, it will bake in a higher markup for retailers. The adjustment will amount to about two cents extra per litre.
“The Board is satisfied that an emergency situation may exist in the Province, which could threaten the security of the petroleum supply,” the board’s order reads.
It’s an interim measure that will stay in place until the board can complete a full investigation of the province’s fuel pricing scheme and make decisions about permanent changes. The process is likely to take months.
Veinot described a dire situation wherein rapidly rising fuel costs and operating costs are making it impossible to turn a profit as a gas retailer, causing some to consider getting out of the business.
“At the end of the day, the gas is not paying them,” she said. “No business is viable when you make no margin, right?”
Veinot said the problem is more pronounced in rural areas where there are fewer gas stations and the ones that do exist are typically independent stores — that is, they’re not owned and operated by big gas corporations such as Irving and Shell.
There’s already at least one case that exemplifies Veinot’s description.
Ming Wong, owner of Somerset Market near Berwick, N.S., shut off her pumps in March.
She said she was subsidizing gas sales with revenue from her convenience store and her own “pocket money.” She said she kept her gas station operating as long as she could to help her community.
“I just used my power to [provide a] service, but now I can’t do it,” she said tearfully in a recent interview.
Ming Wong, owner of Somerset Market near Berwick, N.S., sold gas for 10 years, but turned off her pumps in March. She says she was losing money on gas sales. (Josh Hoffman/CBC)
Wong said she’s upset that locals now have to drive further to fuel up, and she would consider reopening her pumps if conditions changed. The energy board’s decision is a positive step, but “the overall operating environment remains very difficult for independent gas stations,” she said in an email.
The retail markup has been 5.4 cents per litre since 2021 and has hovered around five cents for more than 15 years. The gas dealers association asked for the margin to go up by nearly double to 10.2 cents per litre, but the board granted a lesser adjustment to 7.1 cents per litre.
“We are still advocating for that full amount, but in the interim it does help, it does take the edge off, for sure,” Veinot said.
“It makes a difference between whether or not they’re going to make anything or lose money selling this fuel.”
The energy board said it used a different methodology than the retailers for calculating a new markup — one that came from a consultant who helped the board set the retail gas markup in 2021.
There is also another smaller adjustment applied to pump prices to account for more people using credit cards to pay for gas than when the board last set gas margins.
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