PATRICK BRETHOUR
CALGARY — The cost of a fill-up is continuing to slide across Canada — with a vicious pump-price war breaking out in Southern Ontario — just as motorists gear up for the Labour Day weekend.
In Calgary, pump prices dropped 4 cents to 94.4 cents a litre yesterday, according to a consumer website. In Vancouver, prices also continued to fall, edging down to $1.024, according to a separate website that monitors consumer gas prices.
But the biggest drop by far came in the hotly competitive Toronto-area market, where prices as low as 75.9 cents a litre were sighted yesterday — an amount that does not even cover the cost of the oil used to make gasoline, much less generate a profit.
The price of gasoline in Toronto had already fallen to 88.9 cents a litre as of Tuesday morning, considerably below the national average. Other parts of the country are also seeing declines, but not with the ferocity of the Toronto market.
“It’s quite a significant price war in Toronto,” said Cathy Hay, an analyst at M.J. Ervin & Associates Inc., a Calgary consultancy that monitors national fuel prices.
Drivers in Southern Ontario are enjoying a major respite from high pump prices, but with such price wars a largely local phenomenon, the decline is unlikely to spread across the country.
And Ms. Hay has a piece of advice for Toronto-area drivers with room in their tanks: Fill up fast, because the price war won’t last long.
Ms. Hay said she was puzzled by the outbreak of such a vicious price war. The Toronto market is notoriously volatile, but this week’s fluctuations are a relative rarity. One of the few precedents is a collapse in prices in Quebec in the late 1990s, where drivers were able to buy gas for as little as 17 cents a litre. Shortly afterward, the Quebec government introduced legislation that set a floor price for gasoline.
This most recent price war has spread beyond the immediate Toronto area; in nearby Brampton, pump prices were reported to be as low as 74.9 cents a litre.
The gyrations in the Toronto market largely reflect local competitive pressures, although wholesale gasoline prices have generally been declining in recent weeks. Yesterday, however, the cost of crude and wholesale gasoline edged up in a volatile session, despite rising U.S. inventories of both commodities.
Ms. Hay said Toronto retailers with a posted price of 75 cents are losing nearly 10 cents on every litre of gas — in essence, they are paying drivers to fill up. Refiners are slightly better off, with a 6.5-cent margin, but that spread is anemic compared with that of recent months. M.J. Ervin conducted a spot check of the Toronto market yesterday, and found that retailers have tried several times to increase prices toward 90 cents a litre — but that they have had to beat a hasty retreat.
Ms. Hay said the collapse in prices is not likely to last very long, since retailers will not be able to afford to sell at such a steep loss. With a sigh, she noted that any restoration in prices to even a marginally profitable level will likely be seen as evidence that oil companies inflate prices just before a long weekend.
The U.S. Energy Department also said any decline in oil and gasoline prices is likely to be “limited,” as it all but ruled out a major retrenchment in energy costs.
The Energy Information Administration, the statistical branch of the department, made that comment yesterday, even as it released a weekly update that showed an unexpected increase in U.S. inventories of crude and gasoline.
