Regan Brown
As of 28 July 2025, the price of diesel fuel in Canada was CAD 1.55 per litre or USD 1.12 per litre. The price of diesel fuel is influenced by various factors, including production costs, supply and demand, and government regulations. In Canada, the federal and provincial taxes, as well as the carbon tax, contribute to the final price of diesel fuel. Additionally, the wholesale price of diesel in Canada can be influenced by North American wholesale markets and the export of diesel fuel to other regions.
| Characteristics | Values |
|---|---|
| Current price of diesel fuel in Canada | CAD 1.55 per liter or USD 1.12 per liter |
| World average diesel price | USD 1.18 per liter |
| Average diesel price from 2015-08-24 to 2025-07-28 | CAD 1.37 per liter |
| Minimum price in the above period | CAD 0.89 on 2016-02-08 |
| Maximum price in the above period | CAD 2.30 on 2022-11-14 |
| Federal charges | 4 cents / L |
| Provincial charges | 11.34 cents / L |
| Federal and Provincial Carbon Tax | 12.33 cents / L |
| HST/GST | 9.2% |
| Minimum tax on a liter of diesel | 31.82 cents |
| Number of refineries in Canada that produce diesel fuel | 3 |
| Factors influencing price | Tax, supply, demand, wholesale markets, geopolitics |
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Diesel fuel tax
As of 28 July 2025, the price of diesel fuel in Canada is CAD 1.55 per litre. However, this price doesn't include the various taxes that are applied to diesel fuel in Canada.
The federal government charges an excise tax of 4 cents per litre on diesel fuel. This flat rate has been in effect since 1987. Additionally, three municipalities in Canada (Vancouver, Victoria and Montreal) also apply taxes on diesel fuel. This tax is based on a percentage of the retail price.
On top of the federal excise tax, there are also provincial fuel taxes, which vary by province. For example, British Columbia has a lower fuel charge rate for diesel at 20.74 cents per litre due to its assumption of a higher volume of biodiesel. The Northwest Territories also has a slightly lower fuel charge rate for diesel, at 20.94 cents per litre. Alberta generally has some of the lowest provincial fuel taxes, and the province temporarily paused its fuel tax for the full 2023 year. Manitoba also suspended the collection of the provincial fuel tax on diesel for the public and farmers through to the end of September 2024.
It's worth noting that Provincial Sales Taxes (PST) do not usually apply to diesel fuel, except in provinces with a harmonized sales tax (HST) and in Quebec (QST). Additionally, the federal Goods and Services Tax (GST) is also applied to the price of diesel fuel, and the Canada Revenue Agency collects about $1.6 billion per year from GST revenues on diesel fuel.
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Supply and demand
As of 28 July 2025, the price of diesel fuel in Canada is CAD 1.55 per litre. This is lower than the world average of USD 1.18 per litre. The price of diesel fuel in Canada is influenced by a variety of factors, including supply and demand, production costs, government regulations, and taxes.
The supply and demand of diesel fuel in Canada are impacted by both domestic and global factors. Domestically, the demand for diesel fuel is influenced by the number of diesel-powered vehicles on Canadian roads. Additionally, the supply of diesel fuel in Canada is limited to only three refineries within the country, which can affect the ability to meet demand.
Regionally, the supply and demand of diesel fuel in North America play a significant role. The United States, with its 130 refineries, has a substantial impact on the economic landscape of Canada. The closure of refineries in the US can affect the supply and pricing of diesel fuel in both countries. Furthermore, the export of diesel fuel from North America to Latin America and Europe, in light of the Russia-Ukraine conflict, has further complicated the supply chain and demand dynamics in the region.
Taxes and government regulations also influence the supply and demand of diesel fuel in Canada. The federal and provincial carbon taxes, as well as other taxes, contribute to the final price of diesel fuel. The government's decision to cease the application of the federal fuel charge and remove carbon price requirements for provinces and territories can affect supply and demand. Additionally, the taxation model for diesel fuel differs internationally, with European countries traditionally keeping diesel costs low to support the transport industry and businesses.
The production costs of diesel fuel are another factor in the supply and demand equation. While diesel fuel may be cheaper to produce than gasoline, the taxes, wholesale costs, and retail markups result in a higher price for consumers. The wholesale price includes the costs to buy and refine crude oil, which can be influenced by North American wholesale markets and benchmarks such as New York Harbour for Toronto prices and Edmonton for Thunder Bay prices.
In summary, the supply and demand of diesel fuel in Canada are influenced by a multitude of factors, including the number of diesel-powered vehicles, the number of refineries, regional supply and demand dynamics, taxes and government regulations, and production costs. These factors collectively contribute to the pricing and availability of diesel fuel in the Canadian market.
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Wholesale price
The wholesale price of diesel fuel in Canada is influenced by various factors, including the costs of purchasing and refining crude oil, as well as the dynamics of North American wholesale markets at specific locations, known as benchmarks. For instance, the wholesale price of diesel in Ontario may be influenced by the market prices at the New York Harbor, which serves as a benchmark for Toronto.
Petro-Canada, a subsidiary of Suncor Energy, offers daily terminal rack prices for resellers and wholesale customers. These prices, listed in Canadian cents per litre excluding taxes, are subject to change without notice and are set each business day. The rack prices are effective at midnight, local time, for freight on board (FOB) or product pickup at the listed terminals.
The wholesale price serves as the base price for diesel fuel, and retailers then add their markup, along with applicable taxes such as the federal carbon tax, to determine the final price that consumers pay at the pump. This price variation is evident across different provinces and territories in Canada.
As of July 28, 2025, the price of diesel fuel in Canada was recorded at CAD 1.55 per litre or USD 1.12 per litre. This price is subject to fluctuations and updates based on various factors, including government regulations, market dynamics, and changes in the costs of crude oil.
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Retail markup
As of 28 July 2025, the price of diesel fuel in Canada is CAD 1.55 per litre or USD 1.12 per litre. This is a slight increase from the average diesel price between 24 August 2015 and 28 July 2025, which was CAD 1.37 per litre. The price of diesel fuel in Canada hit an all-time high of CAD 2.30 per litre on 14 November 2022.
The retail markup for diesel fuel in Canada is not a fixed percentage and can vary depending on various factors such as the cost of crude oil, refining and distribution costs, taxes, and the profit margin desired by the retailer. Retailers are free to set their own prices, but they must remain competitive with other fuel retailers in the market.
Generally, the retail markup for diesel fuel in Canada can range from 10% to 30%, depending on the aforementioned factors. This markup is applied to the cost of the fuel, which includes the wholesale price, transportation costs, and taxes.
For example, if the wholesale price of diesel fuel is CAD 1.00 per litre, and the retailer incurs transportation costs of CAD 0.10 per litre and taxes of CAD 0.15 per litre, the base cost of the fuel would be CAD 1.25 per litre. With a retail markup of 20%, the final price at the pump would be approximately CAD 1.50 per litre.
It's worth noting that the Canadian government can influence diesel fuel prices through taxes and regulations. In some cases, the government may fix the prices to maintain stability and avoid drastic fluctuations in the market. Additionally, the exchange rate between the Canadian dollar and other currencies, particularly the US dollar, can impact the retail price of diesel fuel in Canada.
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Comparison to gasoline
The price of diesel fuel in Canada is higher than that of gasoline. In May 2022, diesel prices averaged $2.22 per litre, compared to $1.89 per litre for regular gasoline. In Ontario, diesel prices reached $2.33 per litre, while Quebec saw prices of $2.46 per litre. Newfoundland had the highest diesel prices in Canada at $2.74 per litre.
The reason for the price discrepancy between diesel and gasoline in Canada is due to several factors. Firstly, diesel fuel is in high demand as it powers the economy's semi-trucks, trains, and ships. The reopening of the economy after the COVID-19 shutdowns led to an increase in diesel demand, and oil producers struggled to keep up. Additionally, the invasion of Ukraine by Russia, a major oil producer, disrupted the oil supply and contributed to rising prices.
Another factor affecting diesel prices is the tax structure. In the United States, diesel fuel is taxed higher than gasoline. While federal taxes in the US are higher for diesel, state-level taxes also impact the final price. The impact of US tax policies on diesel prices in Canada is significant due to the close economic relationship between the two countries.
Despite the higher cost of diesel fuel, diesel-powered vehicles offer greater fuel efficiency than gasoline-powered vehicles. Diesel fuel has a higher compression ratio and contains 10-15% more energy than gasoline, resulting in 20-35% better fuel efficiency. However, diesel-powered vehicles are generally more expensive to purchase, and due to their smaller market share, repairs can be more costly.
While gasoline is more widely available at every gas station in Canada, diesel fuel is also offered at many locations, albeit not as ubiquitously. The availability of diesel fuel may vary across regions.
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Frequently asked questions
The price of diesel fuel in Canada was CAD 1.55 per liter or USD 1.12 per liter as of 28 July 2025.
Diesel fuel is more expensive in Canada due to tax and supply issues. There are only three refineries in Canada that produce diesel fuel, and transport costs are higher in regional markets.
The Federal and Provincial governments add taxes to diesel fuel, including a carbon tax. The Federal charge is 4 cents per liter, while the Provincial charge is 11.34 cents per liter. The Federal and Provincial Carbon Tax adds another 12.33 cents per liter, and there is also an average of 9.2% HST/GST.
The world average diesel price is USD 1.18 per liter, which is slightly higher than the price in Canada (USD 1.12 per liter).
