It seems like everybody in town was at the gas station yesterday, and for good reason, we had a good old-fashioned gas war on our hands.
Yesterday morning we reported that Merritt had the lowest gasoline prices in the province at 109.9, little did we know that was just the beginning. Throughout the day a number of stations engaged in a war, slowly lowering their prices just below the other.
According to GasBuddy prices fell as low as 96.9 in Merritt. The BC average is 139.1.
Q101 spoke with Senior Petroleum Analyst Dan McTeague about the war and how the stations can survive selling the fuel so cheap.
“Somebody is obviously taking a beating,” began McTeague. “There isn’t a single station selling gasoline above cost right now. You can’t sell enough beef jerky and corn chips to make up the difference.”
For as long as McTeague has been in the business he can’t remember this level of a gas war.
“I saw a war in Penticton, and they were down six, seven cents below cost, that’s about as much as I’ve seen,” said McTeague. “There are obviously some people really ticked off at each other.”
“If you are selling gasoline 17 cents below cost, and you’re selling 15,000 litres a day, you’re losing $2,500-2,600 a day,” stated McTeague. “So yeah, it’s a war. Someone is going to put up the white flag sooner or later because at this level they’ll be bankrupt within a week.”
One station in town reported selling 30,000 litres, and with McTeague's math that results in a $5,000 loss yesteday alone.
McTeague mentioned where he believes the prices will end up at once the dust settles.
“There is a small wholesale price decrease coming (today), 2.5 cents,” said McTeague. “So, 116.9 is your breakeven, and they usually want eight to 10 cents a litre above that, call it 1.27 to 1.30 would be the price that I wouldn’t be surprised to see most stations in the Okanagan sell at.”
As of Friday morning, GasBuddy was reporting that gas in the city remains the cheapest in BC at 96.9. Merritt is also holding the top eight spots on the list.
On Twitter: @Q101Merritt