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This is a hot topic, but contrary to popular belief, gasoline is one of the most competitively and transparently priced consumer products.
Overview
So what’s up with the price of gasoline? That’s always a hot topic, but contrary to popular belief, gasoline is one of the most competitively and transparently priced consumer products. So how is gasoline priced? There are four factors:
Crude oil prices:As a commodity that trades in world markets, crude oil prices fluctuate according to supply and demand. Global economic conditions, geopolitical or military events and other factors can all affect the price.
Wholesale prices:The wholesale price of refined gasoline is also a factor of supply and demand. World events such as refinery incidents, extreme weather, or changes in demand play a role in determining the wholesale or commodity price.
Retailmark-up:most retailers are independent business owners, so they are able to competitively set their own margins, but the retail price still tends to fluctuate along with wholesale prices. As margins on fuel are typically very low, retailers often add services such as a car wash or convenience store to help them meet their overheads.
Taxes:an average of 49 cents per litre at the pump. These taxes include carbon tax, federal and provincial taxes, and some municipalities charge an additional local tax. Gas prices at the pump are typically lower in the US because of the difference in taxes.
Crude oil prices fluctuate according to supply and demand
Crude oil is a commodity that trades in world markets. The market price of crude oil at any time is a function of commodity traders’ assessments of supply and demand conditions, both current and future. These assessments take into account a variety of scenarios that can affect supply and demand such as economic conditions, natural disasters and geopolitical or military events, especially in major oil-producing regions.
Taxes by Jurisdiction
Canadian gas taxes are more than twice as high as those in the US. Outside of taxes, historical price data shows that the price of gasoline in Canada is very similar to the US. Canadian gas taxes not only vary from one province to another, but also from one region to another. Outside taxes, gasoline prices are similar across Canada.
Key findings
Breakdown of the price of gas by major Canadian cities
The main reason gas has cost less in the United States when compared to Canada is because gasoline is taxed at a lower rate in the United States. Outside of taxes, the average price of a litre of gasoline in Canada is quite similar to the price in the United States.
Key findings
Symmetry of Gasoline Prices in Canada and US
Comparison of average pump price of a litre of gasoline in Canada and the United States
International Comparisons
Historical data shows that Canadians pay less for gasoline than consumers in most countries. The chart below compares the prices in eight countries and shows the effect of taxes on pump prices.
Some provinces regulate the price of gas to prevent below-cost selling, to protect their dealer margins and to ensure retail price stability.
This is called a regulated market. Prince Edward Island, Newfoundland and Labrador, Nova Scotia, New Brunswick and Quebec all have some form of price regulation.
However, many studies and reviews have shown that an open unregulated marketplace is the best way to ensure competitive pricing. Regulated price stability is usually achieved at the expense of higher prices at the pump.
You can learn more about regulated markets in your province:
The main reason gas has cost less in the United States when compared to Canada is because gasoline is taxed at a lower rate in the United States. Outside of taxes, the average price of a litre of gasoline in Canada is quite similar to the price in the United States.
The Canadian government has constitutional authority to regulate gasoline prices only in an emergency. However, provinces and territories can regulate prices, and Quebec and the Atlantic provinces do so.
Natural Resources Canada says that Canadian gasoline is subject to a 10-cent-per-litre excise tax and 5% GST, plus provincial sales tax or HST (which varies by province). There's also a provincial fuel tax that ranges from 6.2 to 27 cents per litre, depending on the province.
Because we sell crude oil to the USA refineries and import their refined products to Canada as gasoline and Diesel, We sell oil at a discounted rate and buy back refined products at premium rate with tax and duties on the top.
Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.
Natural gas usually moves by pipeline, and the costs of transportation are related to the distance the gas must travel. Ontario can get gas from the Western Canada Sedimentary Basin (WCSB) or from the U.S., but the WCSB is much farther away. It may be easier, or less expensive to import the closer U.S. gas.
When planning a road trip in Canada, you need to have a fuel budget. Pay attention to fluctuating gas prices. Find a balance between comfort and consumption to save on your fuel budget. Gas generally costs about half as much in Canada as in Europe, and 25-50% more than in the USA.
One of the most significant factors to consider when comparing the cost of living in Canada and the United States is housing. When it comes to the average cost of rent in Canada, overall, rent prices in the United States are 25.2% higher.
According to data from the OECD, the average gas tax rate among the 34 advanced economies is $2.62 per gallon. In fact, the U.S.'s gas tax is the second lowest (Mexico is the only country without a gas tax) and has a rate less than half of that of the next highest country, Canada, which has a rate of $1.25 per gallon.
Subject to some restrictions, a visitor may bring food with them for their own use, without Customs assessment, provided the quantity is consistent with the duration and nature of the visitor's stay. Gasoline and oil brought into Canada for consumption are dutiable.
Gasoline tax rates were last changed on July 1, 2022. The current rates are: * unleaded gasoline - 9¢ per litre Effective July 1, 2022 until December 31, 2024, the gasoline tax rate on unleaded gasoline will be reduced from 14.7 cents per litre to 9.0 cents per litre, representing a cut of 5.7 cents per litre.
While U.S. costs at the pump hit records in June, they were lower than those in other countries with the largest economies, including France, Canada, China and Britain, but higher than those in other top oil producing nations such as Russia and Saudi Arabia.
Introduction: My name is Kareem Mueller DO, I am a vivacious, super, thoughtful, excited, handsome, beautiful, combative person who loves writing and wants to share my knowledge and understanding with you.
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