On this long weekend, gas prices are top of mind for Canadians. Kevin Page illustrates the conversation with three points and charts that tell the story.

Kevin Page

May 21, 2022

 

Point 1

Canadian gas prices have moved with global oil prices.

The price of oil is set in the global market-place (established in spot and future markets), Three factors largely drive price movements – supply, demand and market sentiment. Prices paid for oil can differ around the world due to factors like transportation and the quality of the oil.

Point 2

Gas price increases are a major contributor to the increase in the CPI inflation rate since 2020.

Gasoline prices contributed 36% of the year-over-year increase in the total CPI in April. The recent increase in the prices of fossil fuels is also reflected in higher home operation costs and food prices.

Point 3

High global gas prices are the norm. In the G7, only in Japan and US do consumers pay less at the pump.

The differences in gas price largely reflect differences in taxes and subsidies.

Kevin Page is the President of the Institute of Fiscal Studies and Democracy at the University of Ottawa, former Parliamentary Budget Officer and a contributing writer for Policy Magazine.