Gas prices across Manitoba are seeing marginal movement this month, with only slight fluctuations of one or two cents per litre.
While wholesale prices have dipped from around 90 cents to just under 88 cents, Dan McTeague, president of Canadians for Affordable Energy, says the real shift is coming at the retail level, where stations are sacrificing their margins just to stay in the game.
“Gas stations are often running at zero margin,” McTeague notes. “They're able to make it up on sales of diesel, premium, or even what they sell in stores.”
The hidden business behind the pumps
The apparent deals at the pump are often subsidized by higher-margin items inside convenience stores. Chocolate bars, beverages, and other snacks offer far more profit than fuel itself. Stations may start the day with one price and drop it by eight cents by evening, just to stay competitive.
“There's a lot more margin on chocolate bars and pop and coffee and beef jerky than there is in gasoline,” McTeague adds.
Big box advantage and the real cost of fuel
Larger retailers, especially membership-based operations like Costco, can access slight supplier discounts unavailable to smaller independent stations. Even with these advantages, McTeague says the real cost of gasoline in Manitoba today lands around $1.20 per litre.
“Anything below that is below cost,” McTeague says.
“Anything above that is the retail margin, up to about $1.25, $1.27, or $1.28, which represents what a gas station needs to operate.”
Why some prices stand out—and won’t last
In some locations like Steinbach, gas has hit $1.34 per litre, well above the break-even point. McTeague explains this may be due to stations attempting to recover from weeks of selling below cost. However, these elevated prices are unlikely to hold.
“That 13 cents will eventually get whittled down,” McTeague continues.
“You’ll probably see a scenario emerge that’s a lot closer to what we’re seeing in Winnipeg.”
Summer driving season could bring hikes
Looking ahead, McTeague anticipates a seasonal bump in prices as Victoria Day and Memorial Day weekends usher in summer travel demand. He expects increases of six to 10 cents per litre heading into late May.
“We tend to see demand going up and we often find the prices reflect that,” he says.
Currency, carbon taxes, and policy concerns
Much of the gasoline pricing puzzle is tied to the Canadian dollar, which remains weak against the U.S. greenback. Because fuel is priced in U.S. dollars, McTeague warns that even domestically produced fuel gets marked up due to exchange rates.
“It’s a dollar thirty-nine to buy one U.S. dollar, which adds about 24 cents to the price of gasoline in Manitoba,” McTeague says.
He adds that the existing clean fuel standard—what he calls a “second carbon tax”—already adds four cents to gasoline and six to diesel."
“It's clear Canadians could not afford the first carbon tax,” McTeague says. “They're not going to be able to afford a second.”
Carbon tax pause expected to impact inflation stats
Looking at the broader economy, McTeague predicts a significant dip in inflation by mid-May, directly linked to the temporary pause on carbon taxes. He believes this could bring the national rate down to 1.5 per cent, helping prevent further interest rate hikes.
“Anyone who thinks that carbon taxes and prices on fuel don’t have an effect on other things like interest rates are kidding themselves,” McTeague says.
The Clean Fuel Standard is a carbon tax — which he calls the second carbon tax — that's still on our gasoline. It's buried, he notes. McTeague says it's about four cents per litre for gasoline and six for diesel.
He closes the interview with a confident forecast:
McTeague outlines an example of what's happening.
Last month (March) saw inflation drop to give the Bank of Canada more leniency and room to drop interest rates. That did not happen. However, with last year's April 2024 gas prices at about $1.60 to $1.65, and this year in April, they were about $1.30. That drop means we'll hear an announcement in May. The inflation will be negligible and collapse.
"So, what I'm expecting... next month, May 15, we'll be hearing big news stories about how inflation has cratered to 1.5 per cent rather than 2.4 per cent, mostly led by gasoline and mostly led by the fact that we have a temporary pause on carbon taxes.
"The fact of the matter is, that's an eye-opener. The fact is that it shouldn't have been imposed in the first place because it's highly detrimental to the cost of living for most Canadians, like it or not. I won't be wrong in that."