Here’s a key tip to pay less for gas in Ontario

If you’re looking to pay less at the pumps in Ontario, there’s a key way to go about that.

It could save you quite a few cents a litre on any given day and it all has to do with timing.

According to fuel price expert Dan McTeague of GasWizard.ca, the crucial piece of advice is to wait until later in the day to fill up your vehicle.

McTeague told INsauga.com that could result in you saving up to eight or nine cents per litre compared to the average price that most stations have earlier in the day.

He noted that gas stations have a lot to factor into their pricing, including wholesale costs, as well as provincial and federal taxes.

The stations have an eight- or nine-cent retail margin, depending on the location, he said.

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“So they’ll start at midnight with a certain price… Usually, about 5 or 6 o’clock, the gas station has had enough business to cover the net cost of what it would cost to run a gas station throughout the day,” McTeague said. 

“So they drop prices to … invite more people into their station. They’re also looking, of course, over their shoulder and saying, ‘Hey, what’s the station down the road charging?’ Because they don’t want to lose market share.”

McTeague said stations want to increase the amount of sales for “ancillaries,” such as convenience store items or car washes, and dropping the price of gas is a way to go about that.

They also want to sell more fuel overall, which could result in getting a discount from their wholesale supplier, he said.

In an interview last week, McTeague gave an example: “Fuel today would be $1.469, but in about an hour or two, it might drop to $1.44 or $1.42. Some will be as low as $1.38 or $1.37. That’s the $0.08 retail margin plus HST, which is 13 per cent.”

He said on average, though, stations usually drop their price by about three cents.

But if you head to a station and look to fill up just as the clock strikes midnight and a new day begins, what often happens is that the price resets to the average cost for fuel, McTeague noted.

“From midnight, they proceed with re-establishing the price, and then they float throughout the day, usually downwards,” he said.

He said gas stations are always focused on receiving money and clients.

“And the best way to ensure that you continue that is by making sure your price is very competitive and that you sharpen your pencil,” he said.

INsauga.com has observed on a number of occasions that at least some stations in Mississauga have significant price differences in the evening when compared to the morning.

Some users on Reddit noted the same on the Mississauga subreddit.

McTeague said the practice happens in a lot of communities in Ontario.

“There are 12,000 or more gas stations in Canada. A lot of them have their own business plan, but not all of them are unique,” he said.

“And some may follow several formulas. So that’s the difference between one versus another. And they are extremely competitive as a group.”

Roger McKnight, the chief petroleum analyst at En-Pro, said that the pump price is largely based on supply and demand.

“They’ll put the prices up. When the demand is down at the later part of the day, then the prices fall. It’s really a matter of how much traffic is going to come up and down that street, possibly go in and out of that gas station at certain times of the day,” he said.

“Certainly early morning is a peak time when people are going to work, and late afternoon is a high time when they’re coming back (from) work.”

McKnight suggested that it might not be as clear as just going out to fill up in the evening.

“You’ve got to figure out when the traffic count is high, then the price is going to go up….  When the traffic count is down, then the price will go down,” he said.

McKnight said that he believes consumers have the best chance of finding lower prices from the mid-morning until about 3 p.m., though McTeague was adamant that later in the day is most commonly best.

McKnight also said that stations monitor what prices are being offered nearby and adjust accordingly.