Canadians are likely saving a few loonies if they’ve gone to fill their gas tanks in the past few days, and prices at the pumps may continue to drop a little more.
Analysts say these recent drops are the result of a combination of seasonal factors, the rise in oil production worldwide leading to larger stockpiles, as well as the removal of the Canadian consumer carbon price in April.
“Gas prices have been falling noticeably across virtually the entirety of Canada. The national average is down over four cents a litre in the last week, and down to about 137.3,” says Patrick De Haan, head of petroleum analysis at GasBuddy.
“Quebec is leading the way with about a five-cent decline, Nova Scotia down about 4.7 cents a litre, small increases in New Brunswick and P.E.I. of about a penny a litre over the last week.”
He added: “We should continue to see pricing improvement, especially on the West Coast, where B.C. could see another five to 10-cent a litre decline in the weeks ahead. Almost everyone should continue to see gentler gas prices as the seasonal trends continue to push prices lower.“
Why are gas prices so low right now?
A wide range of factors contribute to the price consumers pay at gas pumps worldwide, including the price of raw crude oil, geopolitical and economic developments, and weather-related events that can impact the industry.
Oil prices are set globally based usually on how much is available and how much is required.
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Most nations that drill for, refine and ship raw crude oil have increased their production capacity this year, including Canada, the United States, as well as OPEC+ nations like Saudi Arabia.
This means there is a relatively large amount of oil available for nations to buy, and that can often translate to lower gas prices at the pumps.
Seasonal factors can also mean big price fluctuations that are more predictable for Canadians.
One of the changes that happens this time of year is the type of gasoline being sold, in addition to the amount of driving people are expected to do and the fuel they will consume.
“This is the time of year when we are accustomed to seeing falling gas prices. Canadians are driving less as temperatures start to get colder because it’s less conducive for Canadians to get out there and road trip. That’s where we see an increase in demand during the summer when Canadians and tourists are coming in and consuming gasoline,” says De Haan.
“The other big critical factor here is the fact that we have made that transition back to cheaper winter gasoline. That’s usually in the ballpark of a five-cent drop as well.”
According to GasBuddy, winter blends contain more butane than summer blends, and butane makes the fuel easier to ignite inside cold engines.
GasBuddy also says this makes the fuel cheaper to produce because of the low cost of butane relative to other ingredients, which results in lower prices at gas pumps, typically from September through April.
Although these factors are typical of this time of year, 2025’s seasonal change also includes the removal of the consumer carbon price, which led to an immediate drop in prices at most gas pumps across Canada in April.
“Most of the gas price drop in Canada has nothing to do with the price of oil having gone down. It has to do with the federal carbon tax being paused,” says De Haan.
“Canada’s average price is 10 cents a litre lower than last year. The federal carbon tax added 17 cents a litre, so one could successfully argue that gas prices are actually higher than they were a year ago because the carbon tax was in place last year.
Since there are many different factors that go into what consumers pay at gas pumps, it can be very difficult to predict the long-term price, even with consistent seasonal factors.
De Haan says the lowest national average seen so far in 2025 for regular gasoline was just below $1.30 a litre in April, and adds we may even get below that number before the year is done.
“If there’s no other extenuating circumstances or there’s no geopolitical shocks, I do think that the Canadian national average should get back below that. In fact, we could see the Canadian national average fall closer to $1.25 or maybe even $1.20. So I think there’s good news on the horizon,” says De Haan.
“Keep in mind, we are still in the midst of hurricane season, and major weather events like hurricanes can shut down refineries … if we get through hurricane season without any major disruptions, gas prices in Canada could be 10 cents a litre less by the time Thanksgiving rolls around here in the weeks ahead.“
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