Market Snapshot: Lower Canadian diesel demand a reflection of downturns in the mining and oil and gas sectors

Release date: 2016-06-29

Demand for diesel fuel in Canada fell 3.4 per cent in 2015 to 506.9 thousand barrels per day primarily due to weaker economic activity. Diesel demand generally correlates with changes in total Canadian gross domestic product (GDP) and is seen as an economic indicator because it is the main fuel used in truck and rail transportation.

This diesel demand-GDP correlation is particularly strong with regard to the mining, quarrying, and oil and gas extraction sector.Footnote 1 This reflects the high use of diesel as a fuel for excavating and hauling equipment in this industry.

Source and Description

Source: Statistics Canada, CANSIM 134-0004

Description: This line chart plots the annual change in domestic sales of diesel in Canada from 2005 to 2015 in conjunction with the annual change in Canadian GDP for mining, quarrying, and oil and gas extraction. The graph shows the close correlation between these two data series. Diesel demand generally dropped during periods of contraction in the mining, quarrying, and oil and gas extraction sectors, as observed in 2009, 2012, and 2015, and increased during periods of economic expansion, as observed in 2010, 2011 and 2014.

Diesel sales in Alberta, which account for 20.4 per cent of the total volume of diesel sold in Canada, fell 22.9 per cent in 2015. This is the largest year-over-year decline in Alberta diesel demand during the past decade, and reflects the extent of the downturn in Alberta’s energy sector. For comparison, diesel demand in Alberta declined 9.9 per cent in 2009 in response to the global financial crisis, and rebounded in 2010 increasing by 14.4 per cent.

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