Gas Is Still $1.81 a Litre: Why Pump Prices Won't Fall (and What to Do Before Winter)

 

Canadians hoping for relief at the pump got bad news heading into this week: it isn't coming soon. The national average for regular gas was $1.81 a litre on Friday, according to Kalibrate, with provincial averages ranging from $1.557 in Alberta to $2.156 in Newfoundland, per GasBuddy.

That's after a big policy move. On Friday the G7 announced plans to release 100 million barrels of oil right away, starting with diesel. Brent crude dipped on the news, then climbed back to about US$102 a barrel by the afternoon. Don't expect the release to show up at your station, because crude is only half the story.

Crude oil explains only half your pump price

Wood Mackenzie's Jim Mitchell says crude makes up 50 to 60 per cent of the retail price of gas. The rest is the cost of refining it, and that's where the squeeze is. Bank of Canada Governor Tiff Macklem pointed to damaged refining capacity worldwide in a Sept. 21 speech, noting that pump prices reflect crude roughly US$40 a barrel above where it had been. The damage comes from several places:

• Russia: Ukrainian drone strikes on refineries pushed Russian output in June to its lowest in more than 20 years, according to the International Energy Agency. Mitchell says Russia swung from exporting about two million barrels a day of refined product to importing about 100,000 a day in late August and early September, and he puts the diesel swing alone at around 900,000 barrels a day.
• The Persian Gulf: Refineries there are making about a million fewer barrels of diesel a day than before the Iran war, says Rory Johnston of Commodity Context. The only supply gains have come from the U.S.
• Overworked plants: Refineries that are still running are being pushed so hard that maintenance and breakdowns now move prices more than usual.

Brent is up about 39 per cent since late February, when the U.S. and Israel attacked Iran and Iran responded by choking off Persian Gulf oil and gas shipments through the Strait of Hormuz. Even if the fighting in Europe and the Middle East stopped tomorrow, Mitchell says it would take at least a year for global refining capacity to recover.

Why Ottawa's tax breaks can't close the gap

The federal fuel excise tax is off gasoline through Jan. 31, with half of it off through March 31. That's worth 10 cents a litre today. Alberta has also paused its 13-cent-a-litre gas tax until the end of the year. Both help, but neither touches the wholesale market that's driving prices up. Johnston's assessment is blunt: there's little more the federal government can do unless it restricts its own trade, which he says would come with plenty of bad consequences.

There's one more risk. President Trump had threatened to ban U.S. diesel exports, then appeared to back away on Friday. Johnston warned that going ahead with a ban could send global fuel prices up by as much as 100 per cent.

What a fill-up costs right now

Fill-up size	Alberta avg ($1.557/L)	National avg ($1.81/L)	Newfoundland avg ($2.156/L)
40 litres	$62.28	$72.40	$86.24
50 litres	$77.85	$90.50	$107.80
60 litres	$93.42	$108.60	$129.36

Averages cited above; your local station will differ. Totals are price per litre times litres.

What it means for you: The federal tax Ottawa removed is 10 cents a litre. The break halves on Feb. 1 and is gone after March 31, so with everything else equal, pump prices drift up about 5 cents in February and another 5 cents in April. On a 50-litre fill-up that's $2.50 more, then $5.00 more. At four fill-ups a month, roughly $10 more, then $20 more.

What to do about it

• Budget off today's price. Set your monthly fuel line at your local price, then test what an extra 10 cents a litre does to it.
• Shop by the litre. The gap between the Alberta and Newfoundland averages is about 60 cents, which shows how much location matters. A price-tracker app like GasBuddy can show cheaper stations nearby.
• Use rewards, but pay in full. A fuel-rewards or cash-back card can shave your gas costs, but only if you clear the balance every month. Interest wipes out the rebate.
• Plan your winter fuel. If you heat with oil, ask your supplier about price-lock or budget-billing options. Heating oil is closely related to diesel, the fuel hit hardest by the refining shortage.
• Budget for Feb. 1 and April 1. Build the tax-break phase-out into your 2027 numbers now.

What to watch

Whether the G7 release shows up in wholesale prices, whether Washington follows through on or drops its diesel-export threat, and the Jan. 31 expiry of the full federal tax break.

Sources: The Globe and Mail (Oct. 2 and Oct. 5), as reprinted by The Canadian Vanguard; Kalibrate; GasBuddy; Wood Mackenzie; Commodity Context; International Energy Agency (as cited by the Globe). Published Oct. 5, 2026. This article is general information, not financial advice.