Understanding market fluctuations
Like you, we closely follow oil price variations. Our operations do not include oil exploration or production. We buy oil every day and consequently we are exposed to market fluctuations. As a result, we fully understand your frustration and are aware that price variations in petroleum products, especially gasoline, diesel fuel and home heating oil, are an important concern.
The following information will allow you to better understand our industry and may hopefully change the perception held by some that we try to take advantage of the situation in any way we can.
A very competitive market
The reality is that oil prices are subject to large fluctuations that are amplified by pressure from exporting countries and local price wars. These seesaw movements can increase prices by several cents in a few days, weeks or months (or likewise cause them to fall just as much since prices can move in either direction).
Whether it is crude or refined, oil, like many other commodities (coffee, sugar, cotton, natural gas, etc.), is a product that is traded daily on commodity exchanges. It is thus normal that the price is influenced by certain situations such as the threat of a war, increases or decreases in demand, production and inventory levels, refinery shut-downs and pipeline breakdowns that affect producers and refiners doing business on the Atlantic basin (Europe, Africa, the Caribbean, South, Central and North America).
Just like any consumer, we have to deal with these fluctuations and adjust quickly our retail prices in order to minimize the negative impact.
We do business in a very competitive market where, very often, consumers will drive two additional kilometers to fill-up with gasoline at a lower price. Our gross profit margin is very low. We must always identify and implement programs and services that will satisfy our customers and help us maintain and increase our sales. For example, we have added related services such as convenience stores, car washes, automatic tellers and even promotional campaigns.
As part of this effort, we launched our Value Plus program in 1996 to offer gasoline at unbeatable prices. This means we match the lowest prices that are advertised in the areas where we are present. We do so by constantly surveying gasoline prices and adjusting our prices accordingly.