The Iran Effect

B.C. levies the highest provincial fuel taxes in Canada, including its own carbon tax (predating the federal one), a transit tax in Metro Vancouver, and a low-carbon fuel standard surcharge. Despite having refineries in Burnaby and Prince George, B.C. remains a net fuel importer from Alberta and Washington State.

Alberta suspended its provincial fuel tax in 2022 and has kept it low since. Proximity to refineries in Edmonton (the Scotford complex, Sturgeon Refinery, Imperial Strathcona) and abundant supply keep prices the lowest in Canada. Alberta is the only province where pump prices somewhat reflect domestic production.

Ontario has significant refinery capacity (Imperial Sarnia, Suncor Sarnia, Shell Brockville) but also imports crude from the U.S. and overseas. The province's fuel tax is moderate, but the federal carbon levy and HST push pump prices above $1.70 in the GTA during peak demand.

Quebec has only two refineries (Suncor Montreal, Valero Lévis) for a population of 8.9 million. The province imports crude via the Portland-Montreal pipeline and by tanker on the Saint Lawrence. Higher provincial taxes and limited refinery competition keep prices elevated.

New Brunswick's Irving Oil refinery in Saint John is the largest in Canada (320,000 bbl/day) and supplies much of the region. However, Atlantic provinces are import-dependent and fully exposed to global crude pricing. Newfoundland and Nova Scotia regulate retail fuel prices — a unique Canadian approach that smooths volatility but doesn't lower the structural floor.

The $34 billion pipeline expansion tripled capacity to 890,000 barrels per day from Edmonton to Burnaby, B.C., opening Pacific tidewater access for Alberta crude. TMX has narrowed the WCS-WTI discount by ~$5/bbl — a windfall for producers and government royalties, but the savings haven't flowed to consumers at the pump.

The $40 billion LNG Canada project — a joint venture of Shell, Petronas, PetroChina, Mitsubishi, and KOGAS — is Canada's first LNG export terminal. Located in Kitimat, B.C., it will liquefy 14 million tonnes of natural gas per year for shipment to Asia. Fed by the 670 km Coastal GasLink pipeline from Dawson Creek, the project connects B.C.'s Montney gas basin directly to Asian spot markets.

The 670-kilometre pipeline from Dawson Creek to Kitimat carries natural gas from the Montney basin to LNG Canada. Built by TC Energy at a cost of approximately $14.5 billion (over budget from $6.6B), it is now the physical link between Canada's largest gas play and the global LNG market.

Canada has just 14 refineries — down from over 40 in the 1970s. New refinery construction is effectively impossible under current permitting and environmental review timelines. The Sturgeon Refinery in Alberta (opened 2020) was the first new refinery in decades and cost $10 billion — 4x its original budget. Without domestic refining, Canada exports crude and re-imports gasoline, adding cost at every step.

Canada is the only G7 nation without a strategic petroleum reserve. The U.S. holds 400 million barrels in the SPR; Canada holds zero. A reserve would allow the government to release supply during price spikes, dampening volatility. The Trudeau and Carney governments have studied the idea but have not committed funding.

Newfoundland, Nova Scotia, New Brunswick, and PEI all regulate retail fuel prices through public utility boards that set maximum prices weekly. These provinces still experience price increases, but the regulated model prevents the worst of price-gouging and smooths week-to-week volatility. No western or central province has adopted this approach.

Fuel taxes (federal excise + carbon levy + provincial + transit taxes) account for 35–50¢ of every litre sold in Canada. Alberta's decision to suspend its provincial fuel tax saved drivers ~13¢/L. Structural tax reform — such as indexing the carbon levy to global oil prices or capping total fuel tax burden — is politically contentious but would have immediate impact.