Why do gasoline prices have to rise in Canada when world crude oil prices increase?
Since deregulation of Canadian oil prices in 1985, oil prices in Canada have been determined by international market conditions. This means that when world oil prices increase, Canadian producers can get higher prices for their oil and Canadian oil prices increase. When crude oil prices rise, refiners attempt to pass their higher crude costs on to their customers. It is important to note that gasoline prices at any given time reflect not only the price of crude oil but other factors such as local market conditions, inventory levels and government taxes. International agreements such as the North American Free Trade Agreement (NAFTA) prevent governments from requiring that domestic suppliers favour domestic customers. Consequently, Canadian producers must offer their crude oil to our trading partners on the same terms they offer to Canadian refiners. Ontario produces less than one per cent of its oil requirements and must purchase its supplies, either from Western Canada or other source
