The price of crude oil, the wholesale price of gasoline, retail mark-up and taxes are the four primary factors that influence gas prices in Ottawa and all of Canada, according to the Canadian Fuels Association. Unique influences independently impact each factor.
Supply and demand influences the price of crude oil, which is a global commodity, explains the Canadian Fuels Association. Additionally, supply and demand is impacted by factors that include the influence of the Organization of Petroleum Exporting Countries as well as natural disasters and military events in oil-producing regions.
Since gasoline is a commodity, daily trading activity determines the wholesale price, advises the Canadian Fuels Association. The price of crude oil affects the cost of wholesale gasoline, but refinery incidents, changes in demand and poor weather also play roles in determining the price of crude oil.
Retail mark-up of gasoline is the difference between the wholesale cost of gasoline and the pump price before any added tax, as the Canadian Fuels Association explains. Profit and operating expenses are covered by the retail mark-up. As the wholesale cost of gasoline fluctuates, the pump price changes, and part of that change is a shift up or down in the retail mark-up.
Federal and provincial taxes are added to retail gas prices, as the Canadian Fuels Association indicates. Some municipalities also charge additional local taxes, which is one reason that gas prices fluctuate between regions.