Nfld. & Labrador

Cartwright gas station to stop selling gas as profits fade due to recent drop

Dwight Lethbridge says selling gas isn't profitable after the nearly 20 cent drop in the price of gas since Thursday.

Gas prices have dropped almost 20 cents in N.L.

Dwight Lethbridge has decided to stop selling gas at his gas station. He said the station would be unable to make a profit on the current price of gas. (Jacob Barker/CBC)

A gas station in coastal Labrador has made the decision to stop selling gas after a nearly 20-cent drop in the price. 

"It simply comes down to a matter of being viable as a business," said Dwight Lethbridge, mayor of Cartwright and owner of Gateway Convenience. 

"I don't think anyone wants to be in business to lose money, and gas is a volatile product. It's something that's very, very low margin, especially in coastal Labrador."

The price of gas has dropped almost 20 cents in the last two days in Newfoundland and Labrador.

The move comes after a "significant downward shift" in global oil prices according to the Public Utilities Board. Lethbridge assumes the global spread of COVID-19 also has something to do with the drop in price.

"You take the benefit when it comes, you take the loss when it comes," Lethbridge said. 

"But as of late with COVID-19 and the markets crashing over the last six to eight weeks — it's been unseasonable drops that are unprecedented."

Lethbridge said the decision to stop selling gas was made to protect the gas bar's profit margins. As a result of ordering gas earlier this week, Lethbridge estimates he lost $8,500 overnight because of the price drop.

"To see a … 19.8-cent drop over the last two days on that stock that we purchased when the price was higher, I mean, you just can't swallow that pill," Lethbridge said. "It would take us years to recover from a loss like what we were facing yesterday."

Residents line up in front of Gateway Convenience in Cartwright to get one last fill before the store stops selling gas. (Submitted by Marg Hopkins)

Lethbridge said making a change to the way gas is delivered to the station is easier said than done, as the station is four hours away from the supplier. He is also unable to order a smaller load to save money, as it would most likely be an unviable trip for suppliers.

According to Lethbridge, the gross margin on an order of gas is about 10 cents per litre. The station then loses about half its margin due to the costs involved with processing debit and credit cards. Once all is said and done, Lethbridge said he's left with about three to four cents a litre to use for the store.

"It's going to come to a point where private operators are not going to want to sell gas," Lethbridge said. "It's just too volatile."

Black Tickle hasn't had supply now for two years, and I think you can buy gas in Rigolet three mornings a week from the [Nunatsiavut] government.- Dwight Lethbridge

Lethbridge said the PUB needs to change.

"I think they're going to have the look at the model that they're using for us small volume retailers," Lethbridge said.

"Because of the restrictions of the PUB, as far as I'm concerned, that's why Black Tickle and Rigolet don't have viable gas supply at the retail level."

"Black Tickle hasn't had supply now for two years, and I think you can buy gas in Rigolet three mornings a week from the [Nunatsiavut] government. When it's not viable, I don't see how they consider themselves to be protecting the consumer when they consumer doesn't have reasonable access to commodity"

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With files from Peter Cowan