1. What makes up the price of a litre of Shell gasoline?
Four costs go into Shell's pump price: crude oil, taxes, refiner margin, and marketing margin. Gasoline prices go up and down over time and vary from place to place, so the price breakdown for a litre of gasoline also varies.
- 40 - 55 per cent is crude oil costs (the raw material for making gasoline and diesel fuel)
- 25 - 35 per cent is federal, provincial and municipal taxes and the GST
- 10 - 25 per cent is the refiner's margin (the difference between what it costs to buy crude oil and the price refined gasoline sells for in the wholesale market which, in turn, is influenced by supply and demand)
- 4 - 6 per cent is the marketing (or retail) margin that covers retail stations’ expenses and profits.
Source: Natural Resources Canada Fuel Focus Reports, 2007-2008
2. What affects Shell’s wholesale price and the refiner's margin?
Refined products like gasoline and diesel fuel are internationally traded commodities at the wholesale level. As a refiner, Shell Canada sets its wholesale price for each commodity based on supply and demand in Canada and internationally. To do this, we look at posted commodity prices - known as benchmarks - that are set, for the most part, in places like New York, Seattle, and Minneapolis. These then help us determine what our competitive domestic wholesale prices will be in places like Montreal, Vancouver and Edmonton.
3. Why does the price vary from region to region?
The cost of transportation and taxes (provincial and municipal) varies between regions. The level of competition also varies by region based on the principles of supply and demand. The amount of fuel a station can sell may also affect price. Shell retail sites that can support successful convenience food stores, car washes, etc. are in a better position to reduce the revenue they need from fuel sales to have a profitable business.
4. Why are diesel prices higher than in the past?
Diesel demand has increased steadily driven by strong industrial growth in Canada and the growing number of diesel-powered vehicles, particularly in areas such as Europe. As a component of home heating oil, diesel is in far greater demand in the winter, which tends to impact wholesale diesel prices.
5. Why do gasoline prices seem to go up before a long weekend?
Statistically, prices tend to rise throughout the summer months when demand increases due to increased summer travel. Consumers tend to pay attention to the price of gasoline on long weekends because they drive more - and refill their gas tanks more often. However, industry data shows no consistent pattern of prices in the days leading up to a long weekend relative to any other summer weekend.
6. Where can I get more information on fuel pricing?