Taking a balanced look at the economics behind the Canadian gasoline industry, this report concludes that Canadians are well served by the current market system that determines gasoline prices.
Document Highlights
The gasoline industry in Canada follows economic rules of supply and demand, over which it has little control.
Some major observations about the questions that preoccupy Canadians from both within and outside the industry include:
- Retailers influence only about 4.5 cents of the pump price of gasoline. Crude oil and taxes make up about 84 per cent of the average price of a litre of regular unleaded gasoline.
- The rapid increase in world crude oil prices is the main culprit in rising Canadian gasoline prices.
- Retail margins have been declining throughout the 1990s as a result of improved efficiencies in the gasoline industry.
- The volatility in gasoline prices is a direct result of the competitive nature of the business at the street level and the unique way that gasoline prices are advertised to motorists.
- There is no empirical proof that gasoline prices increase before long weekends.
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