Reimbursement for Business Use of Personal Vehicles
Study prepared for The Treasury Board of Canada Secretariat
By Corporate Fleet Services
1 Fuel Price Update Synopsis
Corporate Fleet Services (CFS) has been mandated by the Treasury Board of Canada Secretariat to perform the annual evaluation of per-kilometre Reimbursement Rates for government employees who are required to use their personal vehicles while performing government business. Furthermore, the periodic impact of varying fuel prices is to be evaluated quarterly by producing three additional Fuel Price Updates per year. The present document represents the Update for August 2024 (for publication on October 1st, 2024).
The latest annual study established Reimbursement Rates for each Canadian Province and Territory after performing a comprehensive analysis of all vehicle operating expenses. These rates were presented in the Reimbursement for Business Use of Personal Vehicles Report, dated November 2023 (for publication on January 1st, 2024). Two subsequent Fuel Updates were produced for February 2024 (for publication on April 1st, 2024) and May 2024 (for publication on July 1st, 2024).
The present Update reflects the impact of current fuel prices on the Travel and Commuting Rates’ recommendations made in the Annual Report with a focus on average pump prices of gasoline by Province and Territory. The prices were averaged for each Province or Territory for the three months prior to the release of the current Update (June, July and August 2024). All prices are given in dollars per litre.
This Update also presents the latest recommended rates of reimbursement for consideration by the Treasury Board Secretariat in dollars per kilometre. The recommendations for Reimbursement Rates are given for:
- Travel Rates (travellers authorized and reimbursed to use their personal vehicles on government business travel), also referred to as “Kilometric Rates” in the National Joint Council Travel Directive (Appendix B), and
- Commuting Rates (employees reimbursed their variable expenses to use their personal vehicles to commute to their designated remote worksites), also referred to as “Lower Kilometric Rates” in the National Joint Council Commuting Assistance Directive (Appendix A).
Federal and Provincial sales taxes were also researched to determine if there were any recent changes that could have had an immediate impact on the total costs of vehicle ownership and operation.
For the period June - August 2024, fuel expenses represent 22.7% of the total cost of vehicle operation (reflected in the Travel Rates) or a Canadian weighted average of 13.2 cents per kilometre. The present Update identified small variations in average gasoline prices across Canada, which had a minimal impact on Reimbursement Rates of a maximum 1.0 cent, both upwards and downwards. As a result, the Reimbursement Rates for the ten Provinces either increased by a maximum of 0.5 cents or decreased by a maximum of 1.0 cent relative to the previous Fuel Update (May 2024, for publication on July 1st, 2024). For the Territories, the rates either stayed constant or increased by a maximum of 1.0 cent (see Section 2.2 - Gasoline prices across Canada for details).
2 Fuel Prices
2.1 Energy Market Context
Several factors affected the crude oil markets over the last three months. The two most important factors were the health of the global economy on the demand side and, on the supply side, the interplay of geopolitics, particularly the situation in the Middle East.
Crude oil prices declined in May then changed direction to an upward trajectory in June. This was supported by diminishing crude oil inventories, a positive outlook on possible interest rate reductions in the near future, and supply concerns related to geopolitics. The three-month highest price was recorded on July 3rd, 2024, when West Texas Intermediate (WTI) closed at $83.88 USD per barrel and Brent stood at $87.34 USD per barrel. The crude oil prices slid in July, largely driven by renewed concerns over the health of the global economy, particularly in China and the US, and its impacts on crude oil demand. The period’s minimum price was recorded on August 4th, 2024, with WTI closing at $72.94 USD and Brent at $76.30 USD per barrel. In early August, the mounting tension in the Middle East between Israel and Iran pushed prices up again. As of August 11th, 2024, WTI stood at $80.06 USD per barrel and Brent was at $82.30 USD per barrel.
Overall, gasoline prices followed crude oil and, on average, declined in May and increased in June. However, they remained a little more stable during July and August as compared to oil prices due to a delayed demand surge at the pump that helped to keep prices up. The daily average price for gasoline in Canada varied from $1.711 on May 22nd to $1.628 on June 7th, 2024. From a yearly perspective, the three-month average price in Canada was $1.675, virtually unchanged from the same three-month period last year, when it averaged $1.673.
2.1.1 Global Crude Oil Demand
According to the International Monetary Fund’s (IMF) World Economic Outlook (WEO) Update published in July 2024, the projected global economic outlook remains unchanged compared to April 2024 with the global growth rate remaining at 3.2% for 2024 and slightly improved by 0.1 percentage points to 3.3% for 2025. Notably, however, the divergence is reducing, with the United States (U.S.) and Japan losing momentum, while other economies improved, with their first quarter data being stronger than anticipated. As a result, there have been offsetting revisions that have shifted the growth composition.
The outlook for Advanced Economies as a group remained unchanged at 1.7% for this year and 1.8% for 2025, however, the outlook for individual economies has shifted significantly. The Euro Zone is seeing an improved outlook of 0.9% this year (up from 0.8% in April 2024) thanks to improved activity in the service sector. The growth in the Euro Zone is expected to improve further, averaging 1.5% in 2025.
The U.S., after a period of outperforming expectations, saw a sharper-than-expected slowdown in growth due to moderating consumption and a negative contribution from net trade. As a result, the U.S. growth rate in the first half of this year is estimated to have been 1.5% as compared to 4.0% in the second half of last year. From a yearly perspective, the projected growth rate has been reduced by 0.1 basis points to 2.6% for 2024 and is expected to slow down further to 1.9% in 2025 as the labour market cools and consumption moderates.
On the other hand, the economic growth in Canada has picked up but remains weak relative to population growth, which results in declining consumer spending per person. Strong population growth has increased the supply of workers, resulting in a significant cooling of the labour market. On the other hand, residential investment has been restrained. The Bank of Canada expects that household spending will strengthen further in 2025 as borrowing costs decline. Overall, the Bank projects that the Canadian economy will grow by 1.2% this year (the same rate as last year) and the growth rate is expected to rise significantly to 2.1% in 2025. Similarly, the IMF estimates that Canada’s economic expansion will stand at 1.3% in 2024 and 2.4% in 2025. The Consumer Price Index (CPI) inflation is continuing to move closer to the 2.0% target, declining from 3.4% in December 2023 to 2.7% in June 2024. However, some pressures remain, particularly in the cost of services. The Bank notes that several indicators point to lower inflation including the ongoing excess supply in the economy, as well as falling inflation expectations. However, wage growth remains strong, while at the same time prices for housing remain elevated, led by rent and mortgage interest costs.
The growth in Emerging Markets and Developing Economies, as reported by the IMF, is projected at 4.3% for this year, as well as next year. China’s economic growth has been boosted, likely temporarily, by a rise in exports and is now projected at 5.0% for 2024 and 4.5% for 2025, a significant 0.4 percentage point increase over the previous IMF report. Nevertheless, oil consumption in China, as reported by the International Energy Agency (IEA), contracted in both April and May of this year and is now assessed marginally below levels seen the previous year. Oil consumption in China has for a long time been the engine of global oil demand growth and this change has been seen as a risk to the continued global growth.
As a result, the estimates for global crude demand remain varied. On the one hand, according to the Monthly Oil Market Report (MOMR) from August 2024, the Organization of the Petroleum Exporting Countries (OPEC) projects that global oil demand will reach 104.3 million barrels per day (mb/d) this year, an increase of 2.1 mb/d over last year when it averaged 102.2 mb/d. While the growth projection has reduced slightly, it still remains above the historic average of 1.4 mb/d per year seen prior to the COVID-19 pandemic. On the other hand, the U.S. Energy Information Administration’s (EIA) projections are more conservative at 102.9 mb/d in 2024, an increase of 1.1 mb/d over last year’s average. Similarly, the International Energy Agency (IEA) forecasts an increase of just below 1.0 mb/d in 2024, as well as 2025, due to subpar economic growth, greater efficiencies and vehicle electrification.
2.1.2 Global Crude Oil Supply
The supply to meet the crude oil demand remains strong and could potentially lead to oversupply next year if the global economy slows its pace. For now, however, the supply has been quite balanced with some seasonal fluctuations observed in inventory levels.
The U.S. Energy Information Administration’s (EIA) projection for global crude oil supply has been adjusted downward and stands at 102.4 million barrels per day (mb/d) for this year which would be an increase of 0.6 mb/d over the last year’s average of 101.8 mb/d. The U.S. EIA projects that Organization of the Petroleum Exporting Countries (OPEC) production will decrease by 0.2 mb/d and non-OPEC will increase by 0.8 mb/d. For comparison, the International Energy Agency (IEA) projects a larger supply increase of 0.8 mb/d in 2024, bringing the supply to a record 103.0 mb/d. Notably, IEA forecasts greater shifts in production with non-OPEC+ output expected to rise by as much as 1.5 mb/d and OPEC+ production falling by 0.8 mb/d year-on-year if the existing voluntary cuts are maintained.
Looking forward, however, both the U.S. EIA and IEA project even stronger supply growth. IEA estimates stand at 1.8 mb/d for 2025 with non-OPEC+, mainly in the United States, Canada, Guyana and Brazil, leading gains for a third consecutive year, adding 1.5 mb/d. Similarly, the U.S. EIA projects a 2.0 mb/d day growth next year, averaging 104.4 mb/d. Given concerning indicators on global economic health, this has led to some analysis suggesting that an oversupply of oil could be expected in 2025.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, have made a series of significant output cuts since late 2022 in attempts to balance the market and maintain crude oil price levels. OPEC+ members are currently cutting output by a total of 5.86 mb/d, or about 5.7% of global demand. The cuts consist of 3.66 mb/d, which were due to expire at the end of 2024, as well as voluntary cuts by eight members, totalling 2.2 mb/d, which were expiring at the end of June 2024. During the meeting in early June, OPEC+ agreed to extend the 3.66 mb/d cuts by a year until the end of 2025. At the same time, the group indicated plans to phase out the voluntary portion of those cuts totalling 2.2 mb/d over the course of one year, starting in October 2024. That would result in 540,000 barrels per day equalling about 0.5% of the global supply added to the market in the last quarter of 2024. Nevertheless, the OPEC+ has continued to reaffirm its commitment to maintaining market stability and swiftly halting or reversing production changes if needed.
The geopolitical situation in the Middle East has been a major contributor to the crude oil market movements, particularly in early August. The killings of senior leaders from Iran-aligned militant groups Hamas and Hezbollah raised fears of a wider conflict in the region which could threaten oil supplies. The risks for ongoing conflicts and potential escalations remain elevated, offering a sort of counterbalance to the rising global production.
Since the opening of the Trans Mountain Pipeline in May, Canadian oil exports to the U.S. have been on the rise. As of early July, the pipeline was operating at roughly 80% capacity, transporting 710,000 barrels per day. As reported by the U.S. EIA in mid-July, the exports of Canadian oil to the U.S. rose by 0.8 mb/d to a new record of 4.4 mb/d in the week ending July 12th, 2024. The influx of Canadian crude is displacing other imports, most notably from Iraq, Kuwait, and Ecuador. The geographical proximity of Canadian oil simplifies logistics and offers West Coast refiners increased flexibility.
The Canadian and U.S. energy markets are closely connected. While Canada provides a significant and increasing portion of U.S. crude oil imports, a large portion of the gasoline consumed in Canada comes from the refineries south of the border. The integration of Canadian oil into the U.S. refineries has surged over the past decade driven by robust production and strategic infrastructural advancements. In 2023, Canada supplied 24% of U.S. refinery throughput, a significant rise from 17% in 2013 and an annual growth of 4% year-over-year. As noted by the Bank of Canada, the additional pipeline capacity is anticipated to lead businesses to increase investment in oil and gas production, further developing the Canadian energy sector.
Wildfires around the Canadian oil sands, particularly in Alberta, reduced production during the summer months and forced partial evacuation of Fort McMurray in May. In mid-July as many as 150 wildfires were burning in Alberta with a third of those being out of control. The wildfires threatened not only oil production totalling over 0.4 mb/d or 10% of the province’s output but also the transportation infrastructure, including the newly opened Trans Mountain Pipeline between Edmonton and Vancouver. Nevertheless, no significant disruptions in crude transportation occurred.
The Canadian crude oil benchmark, Western Canadian Select (WCS), typically trades at a discount compared to West Texas Intermediate (WTI). This price difference is largely due to WCS being a heavier blend, requiring more advanced refining processes and higher operating costs. However, the start-up of the Trans Mountain Pipeline has helped narrow the spread between WTI and WCS oil prices from its 2022-2023 average of close to $20 USD, to near $15 USD presently. This trend is expected to continue, but this remains to be seen.
According to the International Energy Agency (IEA), the global oil inventory increased from February through May 2024, reaching the highest level since August 2021, facilitating the declining oil price trend in May. With the start of the summer driving season and increased refinery activity, oil inventories fell in June, while stocks of their by-products, including gasoline, rose due to weaker-than-expected demand in the first half of summer.
2.2 Gasoline Prices Across Canada
Canadian and United States (U.S.) gas prices are tightly interconnected due to the shared infrastructure and trade between the two countries. As the demand for gasoline in the first half of the summer fell below expectations, the prices at the pump did not see as much of a spike as is usually observed during the summer months. As a result, the three-month average price for gasoline in Canada rose only marginally by $0.018 or 1.1%, averaging $1.675 as compared to $1.657 three months prior. British Columbia was the only province seeing a decline in the prices at the pump, while all other provinces and territories remained relatively constant or saw a slight increase.
With the opening of the Trans Mountain Pipeline and the subsequent increase in Canadian crude oil supplies to refineries, both in Canada and the U.S., as well as softer demand for gasoline in the first part of summer, gasoline prices declined across the West Coast from California to British Columbia. According to the U.S. Energy Information Administration (EIA) data, West Coast gasoline inventories in early summer approached 32 million barrels, nearly 2 million barrels or 6.7% above the five-year average. As a result, in the U.S., between mid-April to early June, wholesale gasoline prices decreased by 10%-15% in most states, while California saw a 20%-23% decline. About a third of those price reductions were carried through to the retail gasoline prices at the pump. As gasoline markets are closely connected, this has had a direct impact on the decline of gas prices in British Columbia.
The demand for gasoline picked up in July, later than usual for the summer driving season, pushing prices up at the pump for a few weeks and counterbalancing the effects of the price declines previously observed.
Prices of gasoline, in Canada, include all applicable taxes. Prices vary significantly across Canada, mainly due to the difference in the types and amounts of taxes being charged on fuel in different Provinces and Territories. The present Update calculated the average prices of regular gasoline charged at the pump. The fuel price data was primarily obtained from Natural Resources Canada via Kalibrate (previously Kent Marketing), based on daily published fuel prices for 78 locations across Canada. This data was verified against additional databases that similarly track fuel prices all across Canada.
Consistent with the methodology of the Annual Report, when determining average gasoline prices per Province or Territory, we have used weighted averages according to population in order to better conform to reality. In this manner, metropolitan population centers account for a greater portion of the total average price compared to smaller towns.
The following is a table with average regular gasoline prices for all Canadian Provinces and Territories, in dollars per litre, for the period June - August 2024:
| Province/Territory | Current fuel price ($/litre) |
July 1st, 2024 Fuel Update Report fuel price ($/litre) |
Price difference ($/litre) |
| Alberta | $1.551 | $1.481 | $0.070 |
| British Columbia | $1.838 | $1.938 | -$0.100 |
| Manitoba | $1.422 | $1.366 | $0.056 |
| New Brunswick | $1.695 | $1.698 | -$0.003 |
| Newfoundland and Labrador | $1.802 | $1.805 | -$0.003 |
| Northwest Territories | $1.635 | $1.596 | $0.039 |
| Nova Scotia | $1.738 | $1.712 | $0.026 |
| Nunavut | $1.755 | $1.740 | $0.015 |
| Ontario | $1.639 | $1.593 | $0.046 |
| Prince Edward Island | $1.748 | $1.701 | $0.047 |
| Quebec | $1.723 | $1.712 | $0.011 |
| Saskatchewan | $1.571 | $1.515 | $0.056 |
| Yukon | $1.899 | $1.815 | $0.084 |
Fuel price data was extracted for a period of three months (May 13th to August 9th, 2024) in order to reflect current gasoline price trends. Subsequent reports will focus on three-month periods following the period covered in the present study. Average gasoline prices per litre and per Province or Territory were found to vary between $1.422 in Manitoba to $1.899 in the Yukon, with a Canadian average of $1.675, an increase of 1.8 cents from the previous Fuel Update (May 2024, for publication on July 1st, 2024).
After years of setting its own discounted gasoline prices, Nunavut started to gradually bring its gasoline prices in line with the rest of Canada at the end of 2022, while also accounting for the updates of the federally-imposed carbon tax and recovering the cost of purchasing and resupplying of fuel for the upcoming year. The Government of Nunavut published its latest price update on April 1st, 2024, which marked an increase in gasoline prices for all locations except Iqaluit.
For illustration purposes, Graph 1 displays gasoline prices for the main metropolitan areas for a one-year period (August 2023 - August 2024).
Also for illustration purposes, Graph 2 displays crude oil prices for three benchmarks – WTI (West Texas Intermediate), Brent and WCS (Western Canadian Select) for a one-year period (August 2023 - August 2024).
2.3 Sales Taxes
For the current Update, research was performed to see if there were any relevant changes to Federal and Provincial sales taxes that could have an immediate impact on the Reimbursement Rates. As of the date of this Update, no changes were observed in sales taxes anywhere in Canada as compared to the previous Fuel Update. Moreover, no changes are foreseen at this time for the immediate future.
3 Impact of Fuel Prices on Reimbursement Rates
3.1 Fuel Consumption
In calculating the fuel costs contribution to the total vehicle operating costs, the methodology employed in the Annual Report was strictly adhered to. Fuel consumption for every vehicle model in the study was thus combined with average prices per Province or Territory to determine the fuel portion of operating costs, based on an average of 20,000 kilometres per year.
3.2 Updated Reimbursement Rates
For comparison, the following table provides updated Travel (Kilometric) and Commuting (Lower Kilometric) Rates, as well as rates previously calculated for the Annual Report (November 2023, for publication on January 1st, 2024), the February 2024 Fuel Update (for publication on April 1st, 2024) and the May 2024 Fuel Update (for publication on July 1st, 2024):
Current Reimbursement Schedule (in dollars per kilometre)
|
Travel Rate (Kilometric Rate) |
Commuting Rate (Lower Kilometric Rate) |
|||||||
| Province/Territory |
Current Fuel Update |
July 1st 2024, Fuel Update |
April 1st, 2024, Fuel Update | January 1st, 2024, Annual Report | Current Fuel Update | July 1st, 2024, Fuel Update | April 1st, 2024, Fuel Update | January 1st, 2024, Annual Report |
| Alberta | $0.545 | $0.540 | $0.525 | $0.535 | $0.230 | $0.225 | $0.210 | $0.220 |
| British Columbia | $0.575 | $0.585 | $0.565 | $0.580 | $0.270 | $0.275 | $0.255 | $0.275 |
| Manitoba | $0.545 | $0.540 | $0.540 | $0.560 | $0.230 | $0.225 | $0.220 | $0.240 |
| New Brunswick | $0.585 | $0.585 | $0.575 | $0.590 | $0.255 | $0.255 | $0.240 | $0.260 |
| Newfoundland and Labrador | $0.605 | $0.605 | $0.595 | $0.605 | $0.260 | $0.260 | $0.250 | $0.265 |
| Northwest Territories | $0.700 | $0.700 | $0.700 | $0.705 | $0.325 | $0.320 | $0.320 | $0.330 |
| Nova Scotia | $0.595 | $0.590 | $0.580 | $0.595 | $0.255 | $0.255 | $0.245 | $0.255 |
| Nunavut | $0.705 | $0.705 | $0.690 | $0.680 | $0.335 | $0.335 | $0.325 | $0.310 |
| Ontario | $0.605 | $0.605 | $0.590 | $0.605 | $0.245 | $0.245 | $0.230 | $0.245 |
| Prince Edward Island | $0.575 | $0.575 | $0.565 | $0.575 | $0.255 | $0.255 | $0.245 | $0.255 |
| Quebec | $0.580 | $0.580 | $0.570 | $0.580 | $0.265 | $0.265 | $0.255 | $0.265 |
| Saskatchewan | $0.550 | $0.545 | $0.535 | $0.550 | $0.240 | $0.235 | $0.225 | $0.240 |
| Yukon | $0.715 | $0.705 | $0.700 | $0.720 | $0.355 | $0.345 | $0.340 | $0.355 |
Note: All figures were rounded up to the nearest half-cent.
The impact of gasoline prices on the Reimbursement Rates was minimal for the present Fuel Update. In comparison to the last Fuel Update (May 2024, for publication on July 1st, 2024), the Travel (Kilometric) and Commuting (Lower Kilometric) Rates have either stayed constant or increased by a maximum of 0.5 cents per kilometre for the Provinces, with the only exception being British Columbia, where an average decrease in fuel prices resulted in a decrease of 1.0 cent for the Travel Rate and 0.5 cents decrease for the Commuting Rate respectively. For the Territories, both Reimbursement Rates either stayed constant or increased by a maximum of 1.0 cent.
Overall, Canadian weighted averages increased by 0.5 cents per kilometre for the Travel Rate and stayed constant for the Commuting Rate, compared to the last Fuel Update (May 2024, for publication on July 1st, 2024). They are now at 58.5 cents per kilometre and 25.0 cents per kilometre, respectively.
Fuel contributes on average 13.2 cents per kilometre to total operating costs, ranging from 11.2 cents in Manitoba to 21.8 cents in the Yukon. Given the complexity of socio-economic factors affecting the global energy market, it is difficult to make any prediction regarding gasoline prices for the next three-month period. However, any future changes will be reflected in the next Fuel Update.