What goes into the price of gas

Gasoline prices can be broken down into four key parts. Learn more about how each affects prices at the pump with this video and discussion guide.

Discussion guide

After you’ve watched the video with your students, use this guide to explore key concepts, check for comprehension and lead a discussion.

Key concepts

• Many factors go into the price of gasoline.
• Four key components affect the total price consumers pay: the cost of crude oil, the cost of refining crude oil into gasoline, the cost of retailing and marketing the gas, and taxes from federal, provincial and some municipal governments.
• Crude oil prices are influenced by international markets and supply chain dynamics, while refining costs depend on the type of oil.

Comprehension check

Ask the following questions.

What are the four key components that make up the price of gas? List them from smallest to largest.

The total cost of gasoline is affected by:

• the price of crude oil (40%)
• taxes (35%)
• the cost of refining the oil into gasoline (20%)
• the cost of retailing and marketing the gasoline (5%)

What is the difference between imported oil and domestic crude oil?

Much of the domestic crude oil comes from Western Canada and is heavier than imported oil. That means domestic crude requires more work than imported oil to refine it into gasoline, which increases refining costs.

What is the main reason that gasoline prices vary across the country?

Taxes, on average, make up 35% of the price of gasoline in Canada. But the effect varies across the country because of differences in provincial taxes and, in some places, municipal taxes.

Group discussion

1. Why do you think gasoline prices can change so quickly, even from one day to the next?
2. What kinds of disruptions could affect the price and availability of domestic oil that is exported and foreign oil that is imported?
3. Oil is a global commodity priced in international markets. How do you think the price of oil impacts the of everyday goods and services?
4. Why might governments choose to increase taxes on gasoline? What could be some pros and cons of that decision?
5. How have changes in gas prices affected the decisions you or your family make, such as or spending?