While northerners might not rack up kilometres on their odometers any time soon, many have noticed lower prices at the pump in recent weeks.
Gas prices across Canada and the world have dropped since the introduction of travel restrictions and as more people are staying home. Covid-19 is not the only reason for the reduced price per litre.
Roger McKnight, a chief petroleum analyst with En-Pro International Inc, says a big factor in the price reduction is what he describes as a “family spat” between Russia and Saudia Arabia – the world’s largest exporter of crude oil.
There has been a price war between the two countries since early March, when they were unable to agree to extended cuts to oil output. Both have since been flooding the market with crude oil, McKnight explained, causing the price per barrel to sharply collapse and fall to an 18-year low.
“Crude isn’t really needed because [Covid-19] has blotted out demand almost completely for gasoline and jet fuel – and, to a certain extent, diesel fuel,” McKnight said. “So you’ve got an oversupply on one side and no demand on the other.”
The price of crude oil rose on Thursday as US President Donald Trump tweeted he expects Russia and Saudi Arabia to announce production cuts, though neither country has publicly committed to doing so.
According to Competition Bureau Canada, the crude oil price accounts for roughly 40 percent of what you pay at the pump. Provincial and territorial taxes make up the next chunk, at 35 percent, followed by refining at 17 percent. The rest is the cost of distribution and marketing.
‘Drastic’ drop in Yellowknife
According to GasBuddy.com, the average price for gas in the Northwest Territories on Wednesday was 94.5 cents a litre with the lowest being 92.9 cents.
Jamie Pye, who owns Gastown – the only full-service gas station in Yellowknife – said he’s seeing an impact from the lower prices and Covid-19.
“Sales have drastically dropped due to just nobody being out and on the go any more,” he said.
A Google Streetview photo of Gastown in Yellowknife.
“It’s hard to sustain yourself through this when you don’t have a corporation backing you.”
Pye is not only concerned about his business, but also whether he will still be able to provide employment opportunities for youth. He estimates around 300 local kids have worked at his gas station over the past 15 years.
Pye said cleaning has been increased, employees are wearing gloves, and there are now clear barriers at the tills.
He thanked those who continued to support local businesses.
“I hope that, after this, we survive it all and we just go back to normal, living the fun life we do in Yellowknife.”
Big River sales ‘terrible’
Big River, in Fort Providence, is also seeing fewer customers as the nearby border with Alberta has been closed to most traffic.
“Since the lockdown of the territory [sales] are terrible,” said Chris Mitchell, who runs the gas station. Big River is owned by the Métis Council of Fort Providence.
Sales have dropped about 50 percent, Mitchell said, and the gas station has laid off two thirds of its staff.
The convenience store at Big River remains open. The restaurant is offering takeout but the bar is closed.
The Petro-Canada station in Fort Smith, meanwhile, has been keeping busy.
Angela Bernarde, who works at the business, said customers have been cautious because of Covid-19. The gas station has reduced its hours and limited the number of people allowed into the building at once.
“I’d say we’re fairly busy for one of the places that are open in town,” Bernarde said.
“We just tell people to keep clean, wash your hands, stay safe.”
Norman Wells Transportation has been largely unaffected by Covid-19.
Manager Jim Beroud said sales this time of year are normally low with the closure of the Mackenzie Valley Winter Road.
“People are a lot happier with the low price,” he said.