Pricing Stability

Propane pricing is likely to be more stable than gasoline, diesel, and ethanol-blends, well into the future. For fleet operators, stable fuel pricing is important to the operation and budgeting of the fleet. Over the past five years, propane supply in Canada has averaged 11.9 billion litres, with domestic consumption averaging 3.3 billion litres. This excess of supply reduces pricing volatility over time.

Compared to gasoline prices, propane prices are more stable and in most cases, do not exhibit the day-to-day retail price fluctuations evident with gasoline and diesel prices. The price of propane in Ontario, over the past 12 years, has been consistently about 40% lower than gasoline. This price gap is forecast to remain into the future based on the combination of the limited North American gasoline refining capacity and world demand for crude oil, contrasted against the excess supply of Canadian-produced and world-produced propane.

The pricing for gasoline and diesel fuel is influenced by supply and demand for both crude oil and the finished products. As world demand for crude oil increases so does crude pricing. Uncertainty in crude oil pricing is also affected by the fact that much of the world’s supply is located in politically unstable regions. North American refinery capacity is already near 100% and disruptions in supply can be caused by weather, seasonal demand and the lack of spare international refining capacity. All of these factors contribute to significant pricing fluctuations in gasoline and diesel fuels. The gasoline market will likely remaining volatile for these reasons, into the foreseeable future.