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Table of Contents

National Overview

Canadian Retail Pump Prices Decreased 2 Cents per Litre from Last Week

For the week ending September 20, 2011, Canadian average retail gasoline prices declined by 2 cents per litre from the previous week to $1.25 per litre―a five-month low. Since the beginning of the year, average gasoline prices have fluctuated over a range of 23 cents per litre, compared to a fluctuation range of 7 cents per litre for the same period in 2010.

Diesel fuel prices declined by 1 cent per litre to $1.24 per litre. Furnace oil prices remained essentially unchanged at $1.13 per litre from the previous week.

The decline in retail gasoline prices reflects the decline in North American wholesale gasoline prices and, in turn, weaker world crude oil prices.

Figure 1: Crude Oil and Regular Gasoline Price Comparison
(National Average)

Crude Oil and Regular Gasoline Price Comparison

Figure 2: Weekly Regular Gasoline Prices
Weekly Regular Gasoline Prices

Table 1: Changes in Fuel Prices
¢/L Week of: Change from:
2011-09-20 Previous Week Last Year
Gasoline 124.9 -2.3 +22.5
Diesel 123.6 -0.9 +23.3
Furnace Oil 113.4 +0.1 +24.3

Source: NRCan

Recent Developments

  • Canadian Crude Oil Production Decline: Production of crude oil and equivalent hydrocarbons decreased 6% to 13.1 million cubic metres in June 2011 compared to the same month a year earlier. Exports increased 10% to 9.9 million cubic metres. About 76% of Canada's total domestic production went to the export market compared to 65% a year earlier. Imports fell 19% to 2.8 million cubic metres. (Statistics Canada, The Daily)
  • Decline in Crude Oil Demand Forecasts for 2011 and 2012: According to the International Energy Agency (IEA), world oil consumption will increase more slowly than expected this year and next as the pace of global economic growth eases mainly due to significant economic uncertainties. The IEA cut its estimate of global oil demand growth this year by 160,000 barrels per day to 1 million barrels per day and trimmed its 2012 demand growth estimate by 190,000 barrels per day to 1.4 million barrels per day. Oil supplies should get a major boost from the gradual return of Libyan oil to the market after more than six months of civil war. (Source: EIA, Short-Tem Energy Outlook )

Retail Gasoline Overview

The average Canadian pump price in selected cities for the four-week average ending September 20, 2011, was $1.27 per litre, almost unchanged from the last report on September 9, 2010. However, this represents a 24 cent-per-litre increase compared to the same period in 2010.

The four-week average crude oil price increased by nearly 3 cents per litre to 58 cents per litre compared to two weeks ago. The crude oil cost component represents nearly 46% of the total pump price.

Retail gasoline prices in most Western centres—Vancouver to Winnipeg—increased marginally by 1 cent per litre when compared to the previous report and ranged from $1.15 per litre to $1.36 per litre. Prices in Eastern cities—Toronto to St. John’s—increased by 1 cent per litre and ranged from $1.22 per litre to $1.33 per litre.

At the national level, refining and marketing costs and margins registered a decrease of nearly 3 cents per litre to 30 cents per litre, partly offsetting the increase of the crude oil component of the retail price.

Figure 3: Regular Gasoline Pump Prices in Selected Cities
Four-Week Average (August 30 to September 20, 2011)

Regular Gasoline Pump Prices in Selected Cities 4-Week Average

Source: NRCan

* Regulated Markets

Wholesale Gasoline Prices

For the week ending September 15, 2011, wholesale gasoline prices decreased in most selected centres compared to the previous week.

In both Canadian and comparable U.S. markets, prices, compared to two weeks ago, declined in the range of less than 1 to 6 cents per litre, with the exception of Portland still holding a gap with Halifax.

Compared to four weeks ago, wholesale prices in both Canadian and American markets ranged from a decline of 3 cents per litre to an increase of 3 cents per litre.

Overall, wholesale prices in most selected centres remained between 16 and 30 cents per litre higher than they were at this time last year.

Figure 4: Wholesale Gasoline Prices
Rack Terminal Prices for Selected Canadian and American Cities Ending
September 15, 2011 (Can ¢/L)

Rack Terminals Prices for Vancouver and Seattle Rack Terminals Prices for Edmonton and Grand Forks
Rack Terminals Prices for Toronto and Buffalo Thursday May 1 Rack Terminals Prices for Montreal and Rochester
Rack Terminals Prices for Halifax and Boston

Sources: NRCan, Bloomberg Oil Buyers Guide

Canada's Alternative Fuel Sites

Alternative fuels are available at over 6,000 public stations across Canada. In some cases, these stations are retail operations that offer several choices of fuels. In other cases, alternative fuel facilities offer only one type of fuel.

Gasoline Refining and Marketing Margins

Four-week rolling averages are used for gasoline refining and marketing margins.

Reflecting lower wholesale gasoline prices and an adequate supply in the North American distribution system, gasoline refining margins reversed their upward trend in this reporting period. Margins declined for the second straight week to 23 cents per litre from 26 cents per litre.

Nationally, marketing margins hovered at around 7 cents per litre. Some individual centres show more fluctuations depending on the region, volume sold, and availability of other product offerings such as convenience stores and car washes.

For the five centres, marketing margins ranged from a low of 5 cents per litre in Montreal to a high of more than 7.5 cents per litre in Calgary.

Figure 5: Gasoline Refining and Marketing Margins
(Four-Week Rolling Average Ending September 20, 2011)
_________ Refining Margin _______ Marketing Margin

National AverageVancouver

Source: NRCan

Crude Oil Overview

Strategic Reserve Release Seen as Moderating the Rise in Crude Oil Prices

For the week ending September 16, 2011, prices for the three marker crudes averaged between $553/m3 and $702/m3, (US$89 to US$113 per barrel). Compared to the previous week, the price for Edmonton Par and Brent decreased by $19/m3 and $10/m3, respectively, while the WTI increased by nearly $6/m3.

World crude oil prices fluctuated in a narrow range mainly due to large U.S. crude inventories and lower demand for petroleum products. The combined economic uncertainties in North America and in the Euro zone continue to put downward pressure on prices.

Some analysts credit the International Energy Agency’s decision to release crude oil from Strategic Petroleum Reserves three months ago as the successful element in helping to moderate the rise in world crude oil prices. The program to release 60 million barrels by the 28-nation International Energy Agency, which formally ended on September 15, 2011, was first announced on June 23, when it set off an immediate drop of $7 per barrel in Brent crude prices.

Figure 6: Crude Oil Price Comparisons
Crude Oil Price Comparisons

Changes in Crude Oil Prices
Crude Oil Types Week Ending:
Change From:
Previous Week Last Year
Edmonton Par 583.41 93.78 -18.80 -3.07 +130.27 +23.68
WTI 553.30 88.93 +5.56 +1.02 +64.29 +13.29
Brent 701.77 112.80 -9.63 -1.38 +196.06 +34.57

Source: NRCan

Higher Global Oil Prices and Growing Volatility

According to the U.S. Energy Information Administration (EIA) International Energy Outlook 2011 released on September 19, 2011, worldwide energy consumption is expected grow by 53 percent between 2008 and 2035, with much of the increase driven by strong economic growth in the developing nations, especially China and India. China and India are expected to account for half of the projected increase in world energy use over the next 25 years. China alone, which only recently became the world's top energy consumer, is projected to use 68 percent more energy than the United States by 2035.

Renewable energy is projected to be the fastest growing source of primary energy over the next 25 years, but fossil fuels remain the dominant source of energy. Under the Reference case, world oil prices, in real 2009 dollars, remain high, reaching $125 per barrel in 2035 as the Organization of Petroleum Exporting Countries tries to retain its market share. High prices and more market volatility are likelier now than they were in the 1986-2000 period because spare production capacity is significantly lower and producing nations see no incentive to increase it immediately.

Source: EIA, International Energy Outlook 2011

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