SUPPLY AND DEMANDĪt the end of the day, the issue is a classic case of supply and demand. "So when you get right down to it, the day-to-day prices across Canada follow different markets,” McKnight said in a phone interview on May 17. which is more aligned with wholesale movements in Seattle, Wash. West of Thunder Bay, the price of gas tends to follow more closely with the global price of crude oil, with the exception of lower mainland B.C. If the futures price rises one day, the price at the pump will generally follow 48 hours later. Roger McKnight, chief petroleum analyst for En-Pro, stressed that the country is not unified on how gas prices are set.Īnywhere east of Thunder Bay, Ont., will tend to follow traders on Wall Street, specifically the futures price for oil, he said. "It's not the gas stations or the retailers, it's the wholesalers," he said. This stems from issues around transportation and capacity constraints. What is "peculiar" now is the volatility in the refining margin, which in the Vancouver area has shot up to about 70 cents per litre from 45 cents previously, Antweiler said. In practice, Antweiler said the retail margin for gas stations is relatively flat at around 10 cents per litre in most places where there is competition. Competition between gas stations does vary depending on where in the country you live, which can play a role in what regional gas prices will be.īut price fixing or "collusion" is rare, Antweiler said.ĭrivers in Quebec may remember one example from 2008, when several companies and an individual pleaded guilty and were fined in connection with a gas price-fixing scheme. Generally, the price of gas reacts fairly quickly to changing oil prices, Antweiler said, a point other experts say is true. The Canadian Fuels Association says, in 2021, crude oil made up 39 per cent of the price for regular gasoline, followed by 35 per cent for taxes, 20 per cent for refining and six per cent for distribution and marketing. More specifically, it is the difference between the cost of crude and the wholesale price of gas.Īfter that, there is the retail margin, which goes to gas stations, and then the various federal, provincial and sometimes regional taxes that are added on. They include the refining margin, which comprise the cost to refine, store and deliver. "So we're at the mercy of international markets for better or worse," Werner Antweiler, director of the Sauder School of Business Prediction Markets at the University of British Columbia, told CTVNews.ca in a phone interview on May 17.īeyond the price of oil, different margins also factor into the price of gas. Russia is also the world's third largest producer of oil, making up 11 per cent of the global share. Due to the war in Ukraine, the price for a barrel shot up in recent months, with global benchmarks Brent Crude and West Texas Intermediate selling in excess of US$100 a barrel. One, which may not come as a surprise, is the price of oil. Canada inflation: How we compare to other G7 nationsĪ number of factors play into the price tag drivers see when they fill up their vehicles.Amid high hopes of a return to normal with the end of COVID-19 restrictions, this year may be defined by another concerning trend: the rising price of gasoline.Įxceeding an average of $2 per litre across the country for the first time this month, the cost of gas has set a new all-time high in Canada, with the added toll coming at a time of record inflation and the start of what is often considered the summer driving season.īut what exactly is causing the increase and what are Canadians really paying for at the pump?ĬTVNews.ca spoke to experts about what goes into the price of gas, the effect of refinement on high prices, concerning trends around diesel, and how costs could dissuade consumers from driving altogether.
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