New gas stations are popping up across northeastern Ontario, but analyst says business is not booming

The price of gas continues to set records this winter across northern Ontario.

At the same time, many new gas stations have been opening across the region in recent months.

They can be found from the suburbs of Sudbury to small highway-side towns like Thessalon.

A new station in the Garson area of Greater Sudbury opened last year on land owned by D3 Holdings.

President Doug Anness says a lot of people figure gas stations are a license to print money as the prices keep climbing.

"Everybody always assumes that, but yeah, it's whatever you have to buy it for and sell it for. If they saw the cost to build a gas station they'd have a different opinion," he said.

"The new gas stations are built to a standard the old ones would never touch."

Anness said he figured a gas station would be a good fit for the empty lot left after some old houses were cleared away on Falconbridge Raod. Garson only had only other station, but Anness says most other small northern Ontario towns have at least three.

"There's always a fear of another competitor like Costco or somebody coming to town and taking your business away," he said.

The Sudbury Costco store is planning to put in a gas bar opening this summer, which has driven down the gas prices in other cities.

First Nations gas stations tend to have a similar affect on the market.

Several of the new gas stations in the northeast are on First Nations including at Jocko Point on Nipissing First Nation, Shawanaga First Nation on Highway 69 andon the Rankin reserve of Batchewana First Nation,not far off a busy stretch of Highway 17 running through Sault Ste. Marie.

Batchewana Chief Dean Sayers says it's a public service to the Indigenous community who will seek out First Nations stations for tax exempt gasoline, but with 20 per cent of the Sault population identifying as Indigenous, that "target audience" is also "fairly lucrative."

"As a people, we welcome the competition and it does help bring the price down," says Sayers, noting that the station is attracting many non-Indigenous customers as well.

"It's quite substantially lower than mainstream gas stations."

Despite these new builds,Vijay Muralidharana Calgary-based fuel industry consultant with Kalibrate, says overall the number of gas stations in northern Ontario has gone down "close to 10 per cent" in the last decade.

While he can't get into the specific numbers, he says the decline has been sharper in the Sudbury area.

At the same time, Muralidharan says per site volumetric sales in Sudbury are down slightly in the last ten years, while they're up 14 per cent for Timmins.

He says that means the market is saturated and more Sudbury stations are likely to shut down.

"Which tells that you sites that don't make money will close even more to bridge that gap," saidMuralidharan.

Muralidharan says usually new stations are either built to replace old ones or to be paired with another business like a fast food joint, convenience store, or these days, a cannabis dispensary.

He says while each franchisee has a different deal, most gasoline retailers are onlytaking inbetween 4 and 7 cents per litre, before the costs of running the station.

"These guys work with very little margin and if some cost increase occurs, it eats into their margin," said Muralidharan.

"The volumetric sales have fallen slightly, but your costs have increased, then you don't make money. So they're under pressure, right?So, sometimes when the oil price goes up, they have to increase the price to maintain their margins or maintain the business.

"Long story short, they don't have a lot of room to make money."

He saysthe future of the gas industry is cloudy because of climate change, but the other big and more immediatequestion is how many workers will go back to commuting post pandemic

Muralidharan says gasolinedemandplummeted during the pandemic, bounced back in the U.S. last year, but in Canada is still 14 per cent below 2019 levels.

"Whether this is temporary or permanent, we have to wait and see," he said.