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Crude Oil: The Foundation of All Fuel Prices

Crude oil is the raw input for gasoline, diesel, and other refined fuels. It accounts for a major portion of the final fuel cost—sometimes as much as 40%–50% of the pump price, depending on market conditions.

Even though Canada is a significant oil producer, our domestic fuel prices are largely dictated by global crude markets.

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🔹 Global Pricing, Local Impact

Crude oil is priced as a globally traded commodity, with major benchmarks like:

• WTI (West Texas Intermediate) – The North American benchmark
• Brent Crude – The global benchmark, especially for overseas markets
• Western Canadian Select (WCS) – Canada’s heavy crude benchmark

Canadian producers typically receive a discounted price on WCS relative to WTI or Brent, due to:

• Quality differences (WCS is heavier and more sulfur-rich)
• Transportation limitations (pipeline access and export capacity)
• Refining limitations (not all refineries can process heavy crude)

Despite this, Canadian refined fuel prices are still influenced by global crude trends, because much of our refined product pricing is tied to international benchmarks and U.S. commodity markets.

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🔹 What Moves Crude Oil Prices?

Crude oil prices fluctuate daily based on a range of global factors:

• Supply & demand – OPEC+ production quotas, shale oil output, economic activity
• Geopolitical risk – Conflicts, sanctions, and political instability in oil-producing regions
• Inventory levels – Weekly U.S. and global stock reports influence futures markets
• Macroeconomic signals – Interest rates, inflation, and currency exchange rates
• Natural disasters – Hurricanes and wildfires that disrupt production or refining

These dynamics make crude pricing volatile and difficult to predict, which is why fuel prices often change even when local market conditions stay the same.

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🔹 Why This Matters to Your Business

Understanding crude oil trends helps you:

• Anticipate changes in retail and wholesale fuel prices
• Time fixed-price contracts or fuel hedging strategies
• Justify cost changes to internal stakeholders or customers
• Monitor risk in industries where fuel is a major operating expense

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How Fuel Your Success Supports You

• We help you understand the crack spread impact between crude and refined fuel
• We ensure your supply agreements reflect real market dynamics—not supplier markups

Wholesale Gasoline & Diesel Pricing in Canada

Wholesale fuel pricing plays a major role in what businesses and consumers pay at the pump or in bulk contracts. In Canada, wholesale prices are influenced by rack pricing, crack spreads, and ties to U.S. commodity markets.

🔹 What is Rack Pricing?

Rack price refers to the price posted by fuel suppliers at regional fuel terminals—where fuel is loaded onto trucks for final delivery to retailers or commercial buyers.

Rack pricing includes:

• The cost of the finished product (gasoline or diesel)
• Distribution and terminal handling costs
• Supplier markups
• Regional tax considerations (some included, some added afterward)

These prices are updated daily and can vary across terminals even within the same province, depending on market dynamics, supply contracts, and local demand.

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🔹 The Crack Spread: Refinery Profit Margin

The crack spread represents the difference between the price of crude oil and the wholesale price of the refined fuel (like gasoline or diesel). In other words, it’s the refiner’s margin.

For example:

• If crude oil is $90/barrel
• And gasoline sells wholesale at $120/barrel equivalent
• The crack spread is $30/barrel

Crack spreads fluctuate daily based on:

• Refinery capacity and outages
• Seasonal fuel demand (e.g., summer driving season)
• Global supply chain disruptions
• Regulatory changes (e.g., clean fuel standards)

Higher crack spreads often lead to higher wholesale prices, even if crude oil remains stable.

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🔹 U.S. Market Influence on Canadian Wholesale Prices

Because wholesale gasoline and diesel are commodities traded in U.S. dollars and Canada imports and exports significant volumes of fuel, our prices are tightly linked to U.S. benchmark prices—especially those traded on:

• NYMEX (New York Mercantile Exchange)
• Chicago Spot Market (key for Ontario and central Canada)
• Gulf Coast and PADD markets

This means a supply disruption in the U.S. (like a hurricane or refinery fire) can quickly raise wholesale prices in Canada—even if Canadian supply is unaffected.

 How Fuel Your Success Can Help

• We explain how rack discounts and fixed vs. floating pricing work in supplier negotiations.

Absolutely — here’s a revised version of the Fuel Terminals & Distribution in Canada section, with all numbers removed and replaced with clear, professional, and descriptive language:

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Fuel Supply Terminals & Distribution in Canada

Canada’s fuel distribution network is regionally structured and strategically integrated, with refined products moving through a combination of refineries, supply terminals, pipelines, marine routes, and overland transport.

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📍 Refineries & Primary Terminals

Across the country, refined gasoline and diesel are produced at major refineries located in key regions such as Western Canada, Ontario, Quebec, and Atlantic Canada. From these sites, product is transported to primary fuel terminals—central hubs where wholesale fuel is stored and distributed to the market.

These terminals are typically located near:

• Major urban centres
• Coastal ports
• Pipeline intersections
• Rail and highway corridors

Primary terminals serve as the starting point for commercial distribution, supplying fuel to retail stations, cardlocks, fleets, and bulk buyers.

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🏗️ Bulk Plants & Secondary Terminals

Bulk storage facilities, also known as bulk plants, receive fuel from primary terminals via tanker truck or rail and serve local commercial clients, including construction companies, delivery fleets, farms, and remote operations.

These facilities:

• Offer more flexible delivery options
• Are often located closer to rural or industrial zones
• Enable smaller-volume users to access wholesale product efficiently

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🚛 How Fuel Moves: Distribution Channels

Canada’s fuel supply chain relies on multiple overlapping transport modes to ensure reliable coverage:

• Pipelines: The backbone of fuel movement in major regions, connecting refineries to inland terminals.
• Marine shipping: Common in coastal provinces and along inland waterways, particularly for moving fuel between Eastern refineries and Atlantic markets.
• Rail: Widely used for transporting fuel to remote areas or markets not reached by pipeline.
• Truck transport: The final leg of delivery, responsible for bringing fuel from terminals or bulk plants to retail stations, job sites, or on-site storage tanks.

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🔍 Why Terminal Access Matters for Businesses

The location and availability of fuel terminals near your operations can significantly impact:

• Delivered fuel pricing (rack differentials)
• Delivery reliability and turnaround times
• Access to alternative supply points during disruptions

Understanding the supply chain landscape helps you make smarter fuel sourcing decisions, especially if you’re managing high volumes or operating across multiple regions.

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🤝 How Fuel Your Success Supports You

We help businesses:

• Navigate the fuel distribution landscape
• Choose optimal terminal supply points
• Compare supplier rack pricing and logistics
• Structure supply strategies that reduce cost and risk

Gas Taxes in Canada — Updated April 2025

Fuel taxes remain a significant part of gasoline prices—but recent policy changes have altered their landscape:

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🔹 Traditional Fuel Taxes

• Federal excise tax: 10¢/L on gasoline, 4¢/L on diesel
• Provincial fuel taxes: Vary by province (e.g., Ontario ~14.7¢/L; Quebec ~19.2¢/L)
• Municipal fuel levies: Certain cities (e.g., Vancouver, Montreal) add extra surtaxes

These combine to account for 25–35% of the cost per litre—approximately $13–$18 in taxes on a typical 50‑litre fill‑up (excluding HST/GST).

• Volume: 50 litres of regular gasoline
• Pump price (average): $1.50 per litre
• Total purchase: 50 L × $1.50 = $75.00

We’ll calculate taxes per litre and then multiply by 50 litres. Let’s use Ontario as our example province.

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Ontario Fuel Tax Components:

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🧾 Add HST (13%)

HST is applied after the fixed taxes, on the full price (yes, even including the tax portion).

Pump price per litre: $1.50
Total (before HST): $75.00
HST (13%) on $75.00 = $9.75

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✅ Total Tax Breakdown (50 litres)

So, if you fill 50 litres at $1.50/L, you’re paying approximately $22.10 in taxes, or 29.5% of the total cost of fuel.