11 minute read
Rob Corbett longs for the gas wars of days gone by
George Jeha says he was so angry with his wholesalers that he would spark gas wars by dropping prices at his Stinson station on Cyrville Road . PHOTO BY JULIE OLIVER
Why gas wars have become a thing of the past
Owners used to compete for customers, but those days are over as prices climb
BY RON CORBETT
Remember gas wars?
We used to have them from time to time in Ottawa. Not that often. But they did occur, a few times each year it seemed.
They were easy to notice. Price competition at the gas pumps is rare enough to make Halley’s Comet look like a commuter bus. They never became city-wide wars, more like regional skirmishes, brief periods of competition that flared up along Cyrville Road, St. Joseph Boulevard, Richmond Road.
These were Ottawa’s pockets of gas rebellion, the land where gas-price insurgents lived and worked. Seaway, Saab, Econo, Stinson, Mr. Gas – these were your insurgents. The independent rebels who would drop their prices, occasionally, and force the majors to follow suit.
I covered a few gas wars. They were fun business stories. Ottawa motorists tend to treat gas wars like moveable-feast days. They show up in droves, the streets around the gas station get closed, the police get called out, the television vans show up to do live remotes.
Good, jolly fun. A good gas war is like a good weekend night at Bluesfest.
What happened to them?
I asked myself that question recently, while thinking about things that have disappeared during the pandemic. Downtown government office workers. Early-morning newspaper delivery.
I looked it up, and I’m not dreaming - it’s been a while. The last gas war in Ottawa, a price war significant enough to call out the cops and the tv crews, took place in May 2014.
That was the last time motorists in Ottawa saw competition at the gas pump (we’re talking price competition, not athlete endorsements, or discounted smoothies). Seven years of complete hegemony, with every gas station in Ottawa matching the price of the station down the street.
I read the stories from 2014, and a few things jumped out at me. One, there are some surprising similarities to the summer of 2014 and the summer of 2021.
The other thing was the name of the gas station owner who started Ottawa’s last gas war. I laughed when I saw it.
That makes sense.
DECLARATIONS OF WAR
George Jeha owns the Stinson gas station at 1627 Cyrville Road. He grew up around gas stations, his father owning several of them, including another nearby Stinson station, on Innes Road.
He’s old school. Until the pandemic struck Jeha’s station was full-service. Most of his customers are regulars from the area. He’s been known to extend credit.
“I’ve always enjoyed running a gas station,” he says. “It’s a social thing when you have regular customers. You see some people every week, a bunch of times every week, they become friends. You know them, you know what’s happening to them.”
He says that’s one of the reasons he started the 2014 gas war. To give his regular customers a break at the pump.
One of the reasons. Another – he won’t say which was the greater motivator – was being fed up at buying gas from his competitor.
“I was angry with the majors, angry with the oil industry,” remembers Jeha. “It should be a scandal, the way this industry works, but people don’t care. I don’t know why they don’t care, but they don’t.”
The specific incident that angered Jeha – the Sarajevo-bridge-shot, if you will, that started Ottawa’s last gas war – was a competing gas station dropping its price one morning to below the wholesale price Jeha was paying.
Sign of a competitive market, you say. Not exactly. Jeha’s competitor and wholesaler were the same company.
“The company was selling gas to motorists for less than what they were wholesaling it to me,” says Jeha. “That’s predatory pricing, right? How can that not be predatory pricing?”
He shakes his head. The memory of Ottawa’s last gas war is not a pleasant one for him. I covered that price war. I remember the cars snaking down Cyrville Road, the cop directing traffic who telephoned his wife and told her to bring the mini-van down and fill it up.
It seemed festive. It seemed like something was happening, or about to happen. Today, Jeha wonders why he bothered.
“The majors can do whatever they want,” he says. “Look at the numbers, they’re right there, anyone can see them. But it’s the pandemic, and people have their minds on other things. No one is paying attention. We just pay what we’re told to pay.”
The numbers. Let’s get to those. And the similarities between the summer of 2014 and the summer of 2021.
The most obvious is what we’re paying at the pumps.
The summer of 2014 saw the highest gas prices ever in Ottawa. June set the record, with a monthly average of $1.38 per litre (many stations that month had gas prices above $1.40 a litre.)
This past summer has also seen high gas prices. The monthly average in Ottawa for August was $1.35 per litre. Gas prices in 2021 have averaged between $1.30 to
$1.35 a litre since May.
So, we have two periods of historically high gas prices that are so similar if you were to rank them, you’d be looking at number one and two.
What are the differences? Well, the price at the pump started dropping in 2014, right after the record was set. Indeed, by January 2015 the price for regular unleaded in Ottawa was at its lowest in more than a decade.
Don’t expect to be that lucky this year. Petroleum industry analysts are predicting prices will rise as winter approaches even though the price usually decreases as refineries switch to a less-expensive winter blend. (Like many things in life these days, and with little explanation, we are told the pandemic is to blame.)
There is another difference. In 2014 -- when gas prices were at an all-time high in Ottawa - so too was the price of crude oil. In June of that year – the same month Ottawa set its record – the monthly average for a barrel of West Texas Intermediate (WTI) was $105 (US).
Again, it’s a little different in 2021. The monthly average for a barrel of WTI in August – the most current month at time of writing -- was $63.98 (US).
Grab a calculator and do that math. That’s a $41.02 difference in the wholesale price of oil. Yet Ottawa motorists are paying almost the same price in 2021 as we did in 2014. (It’s probably the pandemic.)
Even accounting for increased taxation since 2014 -- the carbon tax, for example, adds roughly 8.8 cents a litre in Ontario -- Ottawa motorists are still paying historically high prices, at the same time that the wholesale price is low.
One last comparison that goes into the things-that-are-different side of the ledger.
The last time crude oil averaged $60-$65 (US) was the winter of 2015. In January of that year, Ottawa motorists were paying 80-cents-a -litre for regular unleaded.
what’s happening to them. – George Jeha
“See what I mean?”
George Jeha looks up from the newspaper we have been reading, his finger still on the line that has that day’s price for a barrel of West Texas Intermediate.
He doesn’t seem as tired as he did thirty minutes ago. I’ve asked enough questions about the oil industry to remind him of how riled up he was seven years ago.
“How can we be charging $1.30 a litre? Is everyone, is everyone . . .crazy? it shouldn’t be above a dollar. One dollar would be, would be . . too much.”
I wait for him to start sputtering, but it never happens. He settles for shaking his head and putting away the newspaper.
I ask Jeha if he has considered starting another gas war. Maybe it’s time?
“Why bother,” he says. “Nothing changes. Just gets worse. If everyone is happy with this, with how things are, why should I care? I wish it could be different, I really do, but I can’t be the only one who wants to fight.”
He’s right. Is there anyone else out there?
Who knows? Every time I write about gas prices, I want to finish by paraphrasing the last lines of Chinatown – “it’s just the oil industry, Jake.”
While Ottawa has maintained its status as a safe city for commercial investment, the COVID-19 pandemic has changed the way investors think about commercial properties in the capital.
Throughout the last 18 months, the commercial real estate market has seen unprecedented stress on landlords and tenants alike, as companies canceled their leases, malls sat empty and mainstreet retailers shut their doors for good.
Because of this uncertainty, members of the Ottawa Real Estate Board’s Commercial Network say a slowdown in commercial real estate investment was inevitable as buyers were hesitant to purchase properties without a guarantee of financial return.
However, as Ottawa inches further down the road to recovery, investors are eager to capitalize on new real estate opportunities in the capital region, says Michael Pyman, vicepresident of national investment services at Colliers.
Finding safety in retail While mainstreet retailers and local shops bore the brunt of pandemic closures, one retail market segment remains a hot commodity for investors.
Properties with essential service retailers – a grocery store, drug store or Walmart – are in high demand, as they are considered more pandemic-proof and less likely to experience tenant turnover.
“From an investor’s perspective, they’re looking at these buildings with these tenants and they’re seeing the most stable asset they can buy in the retail sector right now,” says Graeme Webster, partner and co-founder of Koble Commercial Real Estate & Brokerage. “We’ve been through a very tough time, and they’ve proven that they can withstand the economic uncertainty so that it is a big draw for investors.”
Commercial agents are also seeing increased demand for these properties outside of the city.
As residents continue to stay closer to home, investors are taking a similar approach – purchasing properties outside of large urban areas, says Webster.
Retail properties in Peterborough, Pembroke and Carleton Place are all of interest to investors, especially since they carry a lower price tag.
Race for industrial space continues Ottawa is also a very tightly contested market when it comes to industrial space – a market both investors and tenants are vying to get their hands on, says Pyman.
Interest in the capital has continued to climb as vacancy rates in industrial properties remain low and lease rates rise.
However, given Ottawa’s lack of new product or large scale land developments available, it is becoming increasingly difficult to meet client demand.
“Investors come from all over the place looking for products in Ottawa, but there are very few 500,000 square foot properties available for larger pension fund or REIT investors,” says Pyman. “And when they do hit the market, there is a lot of competition, bid depth and we continue to see prices climb.”
As Ottawa’s commercial real estate market continues to evolve and adjust to pandemic trends, it is more important than ever to work with a commercial member of OREB to navigate the market, adds Pyman. With so much economic uncertainty, a trusted commercial Realtor can ensure you’re making a good investment for years to come.
Retail properties with an essential business tenant – such as a grocery store – are seen as a top commodity for commercial investors. Photo by Jessica Alberga. WHAT IS A COMMERCIAL REALTOR?
Not all real estate agents are Realtors. REALTOR® is a trademark of the Canadian Real Estate Association and stands for service, competence, and high ethical practice. OREB’s Commercial Services Network Members must meet high standards of education and experience. To find a Commercial Realtor go to https://www.oreb.ca/ find-a-realtor/commercial-result/
HOW CAN AN OREB MEMBER HELP YOU?
Commercial Realtors provide professional services including: • Exclusive access to thousands of listings through the MLS System; • Professional advice based on market knowledge, experience and education; • Tenant and landlord representation; • Advice on real estate investment purchases and leasing
