Red-and-white brand to live

BRENT JANG, 

Petro-Canada's patriotic red-and-white brand will survive and Sunoco's blue and yellow may fade under Suncor Energy Inc.'s plans to buy Petrocan, which bills itself as Canada's gas station.

While the two oil giants are praising the merits of their proposed combination, consumer advocates said yesterday that they're worried about lessened competition at the pumps, especially in Ontario.

"It's going to be a reduction in competition, no matter which way you look at it," said Bruce Cran, president of the Consumers Association of Canada.

At the end of last year, there were 1,323 Petrocan gasoline outlets and 427 stations under Suncor, which includes the Sunoco name in Ontario. The fate of Sunoco's brand has yet to be determined, but Mr. Cran said there already has been plenty of consolidation in the retailing of gasoline and there could be more to come.

Petrocan had 1,800 service stations across Canada in the mid-1990s, but has closed hundreds of outlets over the years. Rivals, notably the Esso and Shell chains, have also shut down hundreds of stations amid what the industry calls razor-thin profit margins at the retail level.

"Preserving the Petro-Canada name has sentimental value for Canadians," Mr. Cran said.

Some drivers avidly take part in the company's Petro-Points loyalty program, while others have been buying commemorative beverage glasses for Vancouver's 2010 Winter Olympic Games, with Petrocan hoping to conjure up pleasant memories for consumers who snapped up millions of Petrocan glasses for the 1988 Calgary Winter Olympics.

Ian Doig, publisher of Calgary-based energy newsletter Doig's Digest, said he was impressed by Petrocan's organization of the torch relay for the Calgary Olympics, but criticized the former Crown corporation for missed opportunities in producing crude oil and natural gas.

For instance, Petrocan reduced stakes in oil fields off Newfoundland in exchange for disappointing offshore Norwegian assets in the 1990s, Mr. Doig said.

Michael Ervin, president of energy consultants MJ Ervin & Associates in Calgary, said that, based on a 2007 survey of gasoline volumes, Esso was the No. 1 brand nationally with 16.1 per cent of the market, followed by Petrocan at 14.6 per cent and Shell at 12.1 per cent. With the addition of Sunoco and other Suncor brands, Petrocan stands to beat Esso to become No. 1 nationally.

"There could be rationalization if there's duplication down the street," said Mr. Ervin, who played down worries by consumer groups about the potential for higher pump prices. Remaining stations would sell more gasoline individually and become more efficient, meaning pump prices could be more competitive, he said.

In Ontario, Esso has also been the top gasoline retailer with a recent market share of 18.8 per cent, followed by Petrocan (17.4 per cent), Shell (13.6 per cent) and Sunoco (9.6 per cent), according to MJ Ervin's survey.