London motorists are revelling in the lowest gas prices in eastern Canada, says a new survey by London-based Kent Group.

The weekly survey of 70 major markets across Canada found the average price in London last week was 90.3 cents/litre.

Brandon, Manitoba was the closest market with a cheaper gas price at 89.9 cents/litre.

Jason Parent, an analyst with Kent said the London market is “unique” in Ontario, with the average price just above the cost price of around 88 cents a litre, reflecting the wholesale cost plus taxes.

“This is not sustainable in the long run for most places... It's an extremely volatile and competitive market with aggressive price cutting,” he said.

The weekly GasBuddy.com survey has similar results, with London gas at 89.55 cents, the lowest price in Ontario, with the exception of Trenton where a local gas war has driven prices even lower. Trenton, with a population of about 20,000, is not covered in the Kent survey.

Parent noted some London outlets were selling gas below cost in the 85-87 cent range.

He said gas bars attached to retailers such Costco and Loblaws may be selling gas at a loss to draw customers to their stores.

Costco, which is usually the price leader in the city, requires gas customers to have a store membership.

Dan McTeague, an analyst with GasBuddy.com, agrees some London stations are selling below cost and that cost price does not pay for labour, utilities, taxes and the price of accepting credits cards.

“I can't see a small mom-and-pop surviving in these circumstance unless they are selling massive amounts of pepperoni sticks, pop and cigarettes,” said McTeague. McTeague said refiners/wholesalers are still making a good profit of about 10-12 cents a litre.

But retail gas profits are so squeezed, major refiners are getting out of the business.

Earlier this year Imperial Oil made a deal to sell 279 Esso gas stations in Ontario and Quebec to convenience store chain Couche-Tard.

McTeague said motorists across Ontario should brace for a price spike on New Year's Day.

That's when the effects of Ontario's new cap-and-trade system goes into effect, which is expected to add about 4.3 cents to the cost of gas.

Parent said the effects of that price spike may be offset somewhat by the normal seasonal drop in wholesale prices seen during January and February.

Parent said overall, there is still a continental glut of crude oil and refined gasoline that should persist for some time.

Average gasoline prices per/litre regular

London 90.3

Kitchener 98.0

Windsor 98.6

Toronto 98.5

Ottawa 96.7

Sudbury 104.0

Montreal 112.4

Halifax 97.6

Winnipeg 92.6

Calgary 84.6

Regina 86

Vancouver 112.6

Canada 100.5

Source:Kent Group

hdaniszewski@postmedia.com

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