Earlier this week, while walking by my local Petro-Canada gas station, I snapped a photo of the gas prices — $1.57 per litre. It was notable, I thought, not because they were so high, but because they were so low — low, that is, for Metro Vancouver compared to summers past. Prices have since gone up to $1.62 at the same gas station as of Wednesday, July 23, and compared to almost everywhere else in Canada, that’s still pretty high. But it’s nowhere near the prices Metro Vancouver motorists have typically paid each summer for the past seven years (2020 excepted.) Last summer, gas prices in Metro Vancouver averaged $1.80 per litre in July, according to Ycharts, and hit highs of $2.37 in Vancouver in June, according to Vancouver Is Awesome.
In June 2022, prices averaged $2.25 per litre. In the summer of 2023, they were in the $2 per litre range. Gasoline prices almost always go up in summer simply because people are doing more car travel, and increased demand means higher prices. They can also spike in January and February – as they did earlier this year – when refineries shut down temporarily to switch from winter to summer blends. The obvious reason for gas prices being somewhat lower right now than they typically might be in the summertime is that the carbon tax was cancelled this year, shaving about $0.17 per litre off the price of gas.
The BC Utilities Commission (BCUC), which is responsible for monitoring gas prices under the Fuel Transparency Act, confirms that retailers have not pocketed those savings. “Overall, BCUC staff observed that retailer dealers did not increase their profit margins following the removal of the carbon tax,” the BCUC reports. “The average BC retail gasoline margin decreased by 9% between March 2025 and April 2025, and retail margins in each of BC’s major fuel tax regions (Vancouver, Victoria, and the rest of BC) decreased during this period.” Even with the carbon tax removed, in Metro Vancouver, motorists still pay $0.27 per litre in other motoro fuel taxes, with the TransLink levy accounting for $0.18.
Another factor in this year’s lower than usual prices is that global oil prices are about US$15 per barrel less than they were last year at this time. Dan McTeague, president of Canadians for Affordable Energy and founder of Gas Wizard, estimates the lower oil price shaves about 13 cents off a litre of gasoline here. But lower oil prices and the removal of the carbon tax may not be the whole story. The expansion of the Trans Mountain pipeline appears to have reduced wholesale prices.
Recall that, after our late premier, John Horgan, ordered an inquiry into high gas prices in 2019, the BCUC came back with a report that said there was an unexplained 13-cent difference between the wholesale (rack) prices in Vancouver compared to Seattle, as well as other locations. Compared to all other cities in Canada, Vancouver still has the highest rack prices, though the spread appears to be shrinking. That is partly due to transportation costs. B.C. has nowhere near the refining capacity that we would need to be self-sufficient, so we are beholden to Alberta and Washington state to make up the shortfall, and there are transportation costs associated with that.
According to the BCUC, British Columbians consume about 210,000 barrels per day (bpd) of refined fuels (gasoline, diesel, jet fuel), but our two refineries (in Burnaby and Prince George) only produced 67,000 bpd. So our refining capacity only covers about 30% of our needs. Most refined fuels come from Alberta, via the Trans Mountain pipeline. And until the Trans Mountain pipeline was expanded, there was limited capacity on the pipeline for refined fuels, meaning some had to move by rail, track, and barge, which is more expensive. So did the Trans Mountain pipeline expansion free up more room for refined fuels, resulting in lower rack prices? Kent Fellows, an economics professor at the University of Calgary’s School of Public Policy, believes it did.
In an analysis he produced for the C.D. Howe Institute in October, Fellows showed a narrowing of the spread between Vancouver and Edmonton rack prices. In the last week of April 2024, before the new pipeline twin was commissioned, Vancouver’s rack prices averaged $0.45 per litre more than Edmonton’s, Fellows noted. In the last week of August 2024, Vancouver’s rack price was just $0.17 per litre more than Edmonton’s – a $0.28-per-litre difference. As of July 19 this year, Vancouver still had the highest rack prices in Canada, but the spread between Vancouver and Edmonton remains less than it was prior to the pipeline’s expansion. As of July 19, rack prices in Vancouver were $1.12 per litre, according to Petro-Canada, compared to $0.89 per litre for Edmonton. That’s a $0.23 spread — half what it was in April 2024, just before the newly expanded pipeline went into operation.
So Fellows’ thesis appears to be holding up. “From 2015 to 2024, the growth in Vancouver gasoline prices (relative to prices in Edmonton and the rest of the prairies) was due almost entirely to insufficient pipeline capacity linking Alberta refiners to wholesale distributers in British Columbia,” Fellows said. That spread between Vancouver and Edmonton rack prices might shrink even further, were it not for B.C.’s Low Carbon Fuel Standard, according to McTeague. Without the added cost of the LCFS, which requires a certain percentage of biofuels to be added to gas and diesel in B.C., McTeague estimates Vancouver’s rack prices right now would be about 18 cents less. He added that the new federal Clean Fuel Standard will mean the rest of Canada will eventually see higher wholesale prices. “For every litre it, it works out to about four cents per litre,” McTeague said. “It will equal B.C.’s by 2030. So the country will catch up to B.C.”
We still have six weeks to go till the end of summer, so we could still see gas prices spike. All it takes to spike gas prices is an unplanned refinery outage or a sudden jump in global oil prices to send gasoline prices through the roof.
But right now, we are getting a bit of break. Enjoy it while it lasts.
Nelson Bennett’s column appears weekly at Resource Works News. Contact him at nelson@resourceworks.com
