Gas prices send drivers to First Nations pumps

GTA motorists fill up on tax-exempt fuel as average price tops $2 a litre

The average price of gasoline in Canada topped $2 a litre for the first time Monday and prices are showing no signs of letting up.

Natural Resources Canada said the average price of regular gasoline hit $2.06, a nine-cent jump from the $1.97 record set last week.

That is up about 30 cents a litre since mid-April.

In Toronto, the price of regular gas is expected to hit $2.099 Wednesday, with premium fuel reaching $2.399, according to the Gas Wizard forecaster.

As prices at the pumps surge to historic levels, drivers in the GTA are steering to First Nations reserves to fill up with cheaper taxexempt fuel.

Dozens of gas stations on reserves have opened or expanded over the past two years to meet the demand.

Station attendants at several reserves across southern Ontario said small First Nations communities with no more than several hundred residents often have several gas stations each with numerous pumps to serve a seemingly endless line of drivers detouring for cheap gas.

At Wolf Energy, a Native-owned gas station in Wahta Mohawk Territory near Muskoka, the demand for gas has been unrelenting for the past six weeks. Each weekend, a line of vehicles stretches more than a kilometre, all the way to the offramp of Highway 400.

“It gets pretty hairy,” said Aaron Hussey, the gas station’s customer service representative. He and his colleagues often have to direct traffic. With a single country road running from the highway to the gas station, the traffic is often chock-ablock, Hussey said.

“Since before Easter, the weekends have been consistently crazy. We’re breaking our record totals, quite often,” he said, adding that many drivers are cottagers from the GTA heading up to their summer homes. “People are coming in not only to fill up their vehicle, but also with a number of jerrycans to fill up their boats, Sea-Doos and snowmobiles in the winter.”

Gas on First Nations reserves is typically cheaper because Indigenous-owned businesses are exempt from some taxes. The price differential between gas on reserve compared to those at off-reserve gas stations is “pretty substantial,” said industry analyst Dan McTeague,

adding that the price gap has continued to widen as fuel prices skyrocket.

“The treaty rights are such that First Nations gas stations do not have to collect the HST,” McTeague said.

“When gas prices are $1 or $1.25 per litre, the savings isn’t as substantial. But when the price of regular gas is more than $2 per litre, you can save 25 cents (a litre) or more by fuelling up on a reserve,” he said. “That’s pretty substantial.”

The savings for premium fuel at on-reserve pumps are even greater than regular fuel, said McTeague, noting that many gas stations in the GTA hike the price of premium fuel to compensate for the tighter profit margins on regular fuel.

“A lot of people buy premium gasoline and they will go to the reserves because the price tends to be substantially less than what you would see in the cities — as much as 40 or 45 cents a litre cheaper. Multiplying that by 70 or 75 litres, you’re now talking savings of $30 or more,” McTeague said.

Hussey expects business at Wolf Energy and other on-reserve gas stations will increasing in the coming months as more people head out of the city and gas prices continue to rise.

“It started just before Thanksgiving. I thought Thanksgiving was really busy but the demand now heads and tails above that,” said Hussey.

Wolf Energy, which opened in November 2020 with eight pumps, has since expanded to 16 pumps. “It’s quite possible we’re going to expand and double the number of pumps again because the demand is so high,” he said.

The burgeoning sector of Indigenous-owned gas stations may also be helping to temper gas prices in nearby markets, McTeague suggested.

“Peterborough, for instance, is not known to be an expensive place for fuel. One would have to think that Alderville and Curve Lake (two nearby First Nations communities with several gas stations) might be playing a small role in that,” he said.

But McTeague is unsure if the rapid growth in the sector is sustainable, particularly if prices begin to drop and the price difference between on-reserve and off-reserve fuel decreases.

“It really depends on what consumers are prepared to pay and to what the extent they’re prepared to go to get that all-important savings.”