LONDON, Ontario -- Canada's gas stations are increasingly becoming divorced from the crude oil producing and refining sectors that have traditionally maintained a "wellhead to gas tank" vertical integration of assets and operations, according to a recent survey, National Retail Gasoline Site Census 2012, of Canada's retail gasoline facilities by petroleum consultancy MJ Ervin & Associates.
The total number of retail gasoline stations in Canada stands at 12,285 as of Dec. 31, 2012, or 3.5 gas stations for every 10,000 persons; this represents a continuation of a downward trend since 1989, when more than 20,000 stations existed in Canada.
"We have seen virtually no increase in the retail gasoline margin in over 25 years," said Michael Ervin of MJ Ervin & Associates. "Retail gas stations are no longer seen as a strategic asset for integrated oil companies," since refiners typically have ongoing gasoline supply agreements with several third-party retail chains who themselves do not operate refineries.
Only 14% of Canada's gas stations come under the direct price control of the three major oil companies (Shell, Suncor and Esso), although their brand names appear on 36% of all gas stations, many of which are price controlled by the local dealer or by a regional marketer holding the rights to use the major brand on its sign and pumps.
At the time MJ Ervin completed the study, nine integrated refiner-marketers operated in Canada, representing a total of 15 refineries across the country. Recently, the number of integrated refiner-marketers declined to eight, with the recent split of Valero, the owner of Ultramar, into separate refining and marketing companies. By contrast, there are more than 60 petroleum marketers in Canada who do not operate refineries, and more than 90 distinct brands of gasoline.
These nonrefiner marketers represent 77% of Canada's retail gas stations, up from 70% in 2006, and reflecting a shift in retail gasoline ownership from refiners to nonrefiners. A growing segment of this sector is the big-box retailer, which has proliferated over the past decade and through competitive pricing and other incentives, has contributed to the overall decline in conventional gas stations.
MJ Ervin & Associates, a division of The Kent Group, is a London, Ont.-based consultancy specializing in the petroleum refining and marketing industry.
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