Market Snapshot: Why do gasoline prices differ across Canada?

Release date: 2017-09-13

The retail price of gasoline is comprised of the following components: the crude oil price, the refining marginFootnote 1, the marketing marginFootnote 2, and taxes (federal, provincial or territorial, and municipal). Retail gasoline prices vary across Canada because of differences in these components.

Source and Description

Source: NRCan, NEBFootnote 3

Description: The graph shows a breakdown of provincial and territorial (except NunavutFootnote 4) retail gasoline prices between July 2016 and June 2017. Gasoline prices are comprised of the crude oil price, refining margin, marketing margin, and taxes. In general, the largest component is the crude oil price, which was on average 40 cents per litre (¢/l). The next largest component is taxes which were on average 36 ¢/l. The refining margin and the marketing margin averaged 20 ¢/l and 14 ¢/l respectively. The highest gas price was in Newfoundland and Labrador at 131 ¢/l, with the largest component of this being taxes (57.1 ¢/l). The lowest prices were in Alberta, Saskatchewan, and Manitoba, which were around 97 ¢/l.

Newfoundland and Labrador (NL) had the highest taxes, marketing margins, and overall price among the 10 provinces. In June 2016, gasoline prices increased significantly in response to the NL government doubling its provincial sales tax. NL also has a small, widely dispersed population, which makes it costly to transport gasoline and operate retail stations.

British Columbia (B.C.) had the highest refinery margins and 2nd highest overall price among the provinces. Yukon and Northwest Territories have overall prices similar to B.C. due to higher marketing margins related to the remoteness of northern communities.

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