Why do you pay so much for gas? Here's a hint: It's not just taxes
Limited refining capacity and rising demand can also drive up the price
If you're a Metro Vancouver driver, you already know you're paying an awful lot for gas with prices hovering around $1.70 a litre.
You're well aware that oil and gas companies and refineries all want to make a profit, so that's factored into the cost.
You also know that a hefty chunk of what you spend goes toward tax.
Taxes alone, however, don't explain why B.C. has the most expensive gas in the country and have nothing to do with sudden fluctuations in price.
So, the next time you're at the pump cursing about how much you're spending, here are some things to keep in mind.
Well, yeah. There's a lot of tax
Tax isn't the only reason gas is so expensive in B.C., but a big piece of what you pay at the pump goes to Victoria and Ottawa.
Here's a list of all the taxes you pay on a litre of gas in B.C.:
- Provincial motor fuel tax (Metro Vancouver) — 1.75 cents
- Provincial motor fuel tax (everywhere else in B.C.) — 7.75 cents.
- B.C.'s carbon tax — 8.89 cents.
- The B.C. Transportation Finance Authority tax — 6.75 cents.
- TransLink tax (If you live in Metro Vancouver) — 17 cents, increasing to 18.5 cents on July 1.
- Transit tax (If you live in Victoria) — 5.5 cents.
- Federal excise tax — 10 cents.
- Finally, pay the five per cent Goods and Services Tax on top of the total price.
When you add it all up, you're paying more than 60 cents a litre in tax if you live in Metro Vancouver.
Limited supply
B.C. only has two oil refineries — one in Prince George that produces about 12,000 barrels a day and one in Burnaby that has a capacity of about 55,000 barrels a day.
The Burnaby refinery provides gas to Metro Vancouver and Vancouver Island, but it can't come close to meeting the region's fuel demands.
To make up the difference, B.C. brings in petroleum from Alberta through the Trans Mountain Pipeline or from other countries.
The Cherry Point Refinery in Washington State is also a major source of gas for B.C.
Seller's market
When refineries close or scale back production due to mechanical problems or scheduled maintenance, it chokes the supply of fuel to B.C.
As a buyer in a seller's market, this puts B.C. in a difficult spot.
The province now has to find other sources for its gas and diesel and it's competing against other regions for that fuel.
If multiple refineries in the Pacific Northwest scale back production at the same time, competition for fuel increases and the price goes up.
B.C. has high fuel standards
Not all fuel is created equally and B.C.'s emission standards are some of the highest you'll find anywhere.
All gas and diesel that is sold in B.C. must include renewable materials and meet the province's carbon targets.
Jason Parent with the petroleum consulting company the Kent Group says this adds to the refining cost which ultimately gets passed along to consumers.
"We've seen that cost increase as regulations become more stringent over the years," he said.
"That's a cost that is raising the wholesale price of gasoline."
Other factors — such as global markets, time of year and the strength of the Canadian dollar — also affect the cost of gas.