FAQs & Gas Facts
1) Components of the price of gas
Generally speaking, the cost of crude oil accounts for about half of the price of gas. Provincial taxes, which vary across the country, and federal taxes comprise about another 30 per cent, while the rest is refining and marketing cost, the cost to transport the gasoline and profit
2) What factors determine the price of gas?
Many factors influence the price of gas since crude oil and refined gas are traded on commodities markets. Factors that can influence the pump price include:
- Seasonal changes
- Weather conditions
- Geopolitical conflict
- Increased demand
- Status of oil and gas reserves
- Refining capacity
- Value of the US dollar
Natural Resources Canada explores this issue in depth.
3) How is the price of gas determined?
There are several factors that play into the price you see at the pump, including supply and demand, crude oil prices, the cost of refining crude, taxes, and the local market.
The retail margin varies according to the size of the town or city. In the gasoline market, prices announced in large cities are generally lower than the prices in small towns. Because gas stations located in urban areas often have greater volume than stations in smaller towns, their retail margin is often lower.
Natural Resources Canada explores this issue in depth.
4) Why do Gasoline Prices Vary Across Canada?
The price you pay for gasoline at your local service station can vary based on the type of gas, regional taxes, the level of competition, the amount that outlet sells, and the type and location of stations.
Learn more about price variants here.
5) How is gasoline made?
Gasoline is made from crude oil, which is pumped out of the ground as a black liquid called petroleum. The oil is transported to a refinery where it is processed. The end product is a blend of several refinery streams containing hundreds of chemical compounds.
6) How much gas do Canadians consume?
According to Natural Resources Canada, Ontario and Quebec account for an average 60% of the gasoline consumed in Canada. The western provinces consume about 32% of Canada’s gasoline, while the remaining 8% is consumed in the Atlantic Provinces and the North.
7) Where does Canadian refineries’ crude oil come from?
For geographic and economic reasons, crude oil is exported from the West and the Atlantic offshore and imported to the eastern and central regions. About half of the crude oil used by Canadian refiners to meet consumer needs is imported from OPEC countries, the North Sea and North America. (Source: Statistics Canada)
8) If Canada produces so much oil, why do we also import it?
Oil is produced and exported from Western Canada and Newfoundland, while the refining industry in Atlantic Canada, Quebec and part of Ontario relies upon imported crude oil. This is because it is very expensive to send crude oil from Western Canada to those refineries in Eastern Canada, which have relatively easy access to offshore crudes. Instead, the surplus Canadian crude oil produced in Western Canada is exported to U.S. refineries that are relatively closer to the source of production. (Source: National Resources Canada)
9) Is Canada’s gasoline market governed by law?
Yes! Canada’s retail gasoline market is governed by the federal Competition Act and Emergencies Act.
You can read about the Acts here.
10) What are alternative fuels and are they available in Canada?
Alternative fuels include ethanol, biodiesel, natural gas, propane, electricity, fuel cells and hydrogen.
To learn more about alternative fuels:
- Check out Natural Resources Canada’s alternative fuel facts.
- Check out Gas, Hybrid and Electric: What You Need to Know, CAA’s easy-to-read and navigate e-book that provides simple but complete explanations on everything from today’s gas engines to hybrids and electric vehicles.
- To learn more about electric vehicles, visit CAA’s Electric Vehicle online portal. The portal answers common questions about what’s on the market, batteries and government incentives.
11) What is ethanol?
For the time being in Canada, ethanol is primarily made from corn and wheat. It is mixed with gasoline to produce an environmentally advantageous fuel that is comparable to gasoline. Gasoline containing up to 10% ethanol is available in some Canadian service stations and can be used in vehicles with a regular gasoline-powered engine.
To learn more about ethanol, visit: Natural Resources Canada.
12) Where does the Gas price information come from?
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