Gas Facts

Fluctuating gas prices from oil companies in Canada are sometimes a source of great confusion for many people. MacEwen Petroleum Inc. would like to help by providing our customers with these helpful Gas Facts provided by the Centre for Energy, and the Canadian Automobile Association.

Gasoline Cost Breakdown1. What factors determine the price of gasoline? Crude oil prices are determined in much the same way as other stock or commodity prices around the world - when inventories are low or demand increases, prices rise. Canada, like most other oil producing countries, does not regulate the price of crude oil, allowing Canadian-produced crude oil to sell at the prevailing world price. Non-OPEC countries like Canada and the U.S. do not have the short-term production capacity to make up for any decline, natural or otherwise, in inventory, making OPEC influential in crude trading markets - and over the longer term, affecting the price of gasoline.

Another factor is the rise of global and regional commodity markets for refined products such as gasoline. Commodity buyers buy wholesale when gasoline is cheap, and sell for a profit when there is greater demand. This can trigger abrupt changes in regional markets - and the price you pay at the pump.

2. How much of the price of gasoline am I paying in taxes? That depends on where you live in Canada and where you buy your gasoline. Taxes are usually responsible for the large component of gasoline prices. On average, Canadian taxes represent 30 to 40 per cent of what you pay at the pumps.

The federal portion consists of the excise tax, which is 10 cents per litre. In addition, the Goods and Services Tax, which is 5 per cent (as of January 2008), is added to the total pump price, and is effectively a tax on tax. (In the Atlantic, the GST is represented as a portion of the Harmonized Sales Tax.)

The provincial tax portion varies from province to province. Provincial taxes range from 6.2 cent per litre in the Yukon to 20.4 cents in Prince Edward Island. In some urban centers, such as Vancouver and Montreal, an additional transit tax is levied.

3. Why do gasoline prices fluctuate so often? Studies have shown that the changes in gasoline prices are a result of competition within the market and the cost of the product. Gasoline prices are also affected by delivery costs, and supply and demand. Statistically, gasoline prices tend to rise throughout the summer months because of increased summer travel, and consumers may notice increases on long weekends, because that is when they drive more and longer - and therefore have to fill up their tank more often.

In addition, market competition leads to gasoline price wars, gasoline discounts and other consumer incentives. The posting of gasoline prices on large outdoor signs enhances consumer awareness of price swings and competitive costs.

4. Canada has 5 billion barrels of conventional oil reserves and 173 billion barrels of oil sands reserves for a total of 178 billion barrels, second only to Saudi Arabia.
Source: Canada's Oil, Natural Gas and Oil Sands - Overview and Outlook, Canadian Association of Petroleum Producers, Washington presentation, February 2009

5. Canada is the seventh largest oil producer in the world.
Source: Canada's Oil, Natural Gas and Oil Sands - Overview and Outlook, Canadian Association of Petroleum Producers, Washington presentation, February 2009

6. A total of 4,991 oil wells were drilled in Canada in 2008.
Source: Canadian Association of Petroleum Producers, Statistical Handbook, 2008

7. At 1,931,000 barrels per day, Canada was the largest exporter of crude oil to the United States in 2007.
Source: Energy Information Administration 2008

8. At 2,459,000 barrels per day, Canada was the largest exporter of crude oil and petroleum products combined to the United States in 2008.
Source: Energy Information Administration 2009

MacEwen E85 Ethanol Pump9. The first commercial oil well in Canada was dug by James Miller Williams in 1858 near Petrolia in southwest Ontario.
Source: Evolution of Canada's Oil and Gas Industry, Canadian Centre for Energy Information 2009

10. Canada's first major offshore oil discovery was Hibernia, drilled off the coast of Newfoundland and Labrador in 1979.
Source: Evolution of Canada's Oil and Gas Industry, Canadian Centre for Energy Information 2009

11. There are about 3,000 products made from petroleum.
Source: Alberta Department of Energy, 2009

12. Canada's natural gas reserves rank 20th in the world.
Source: BP Statistical Review of World Energy 2009

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