Gasoline is getting cheaper in Ottawa – but only if you’re a Costco member.
The discount retail store opened its first gas station in Ottawa on Oct. 27, setting what could be a new precedent for gasoline prices in Ottawa.
After opening on Merivale Road, Costco was selling gas for about four cents per litre less than nearby gas stations, attracting the attention of consumers.
Costco can sell gasoline at a lower price because it doesn’t accept credit cards, doesn’t supply mid-grade gasoline and isn’t open 24 hours, says Ron Damiani, a Costco representative.
“Our customers were very upset when we took away the convenience of being able to pay with a credit card,” says Damiani. “But when we sit down with our members and tell them this is why we’re able to pass on these prices, they say, ‘Oh yeah, I get it now.’ ”
Not accepting credit cards cuts between two and four per cent of charges. The company would otherwise have to pay and then add to gas prices, says Damiani. Offering only regular and super-grade gasoline eliminates the expense of installing and maintaining mid-grade gasoline, he says.
But will Centretown gas stations need be respond to Costco’s lower prices?
Not necessarily, says Gregg Laskoski of GasBuddy.com, a website dedicated to helping consumer find the lowest gas prices in North America.
Consumers need to decide if having competition between only two major retailers is what they want, says Laskosi.
“Is the public better off with more competition spread out in many places? And I think we all the know the answer to that question is yes,” says Laskoski.
Most Centretown gas stations refused to comment on the new Costco gas station but Laskoski says it’s not something they need to worry too much about since Costco is not a great threat to business.
He says retailers such as Costco operate gas stations so they can attract more customers into their stores. Because of that, customers need to be Costco members so Costco is not directly competing with other gas stations.
“The person driving down the road, if they don’t have a Costco membership they can’t pull in and fill up at the Costco pumps,” Laskoski says.
Though cheaper gas is a bonus to drivers on a budget, it’s not a big enough savings to drive across town to get it, says Jeff Day, a Centretown driver.
“I do have a PetroCanada card that gives me five cents off a litre and there is one right across the street from me,” he says. “So unless it’s a huge difference in prices, I wouldn’t really drive all the way out to Merivale to get gas.”
But he says if he didn’t have that PetroCanada card, he would consider becoming a Costco member to get the cheaper gas.
“But really, when I’m right downtown, it’s a waste of gas to drive out there just to save a few cents,” Day says.