Reimbursement for Business Use of Personal Vehicles
A Study prepared exclusively for
The National Joint Council
of the Public Service of Canada
by PHH Business Analytics
Fuel Price Update
The National Joint Council establishes reimbursement rates for business use of personal vehicles and periodically considers the impact of changing fuel prices on those rates. Rates were established for 2012 based on a comprehensive review of costs as presented in the "Reimbursement for Business Use of Personal Vehicles Model Year 2012 Update" dated December 2011. This update reflects the impact of recent fuel price changes on the recommendations made in the Annual Update. Current representative fuel prices by Province are given in dollars per litre in the following table. These represent pump prices for regular gasoline for December 2011 and January and February 2012. For reference, fuel pricing from the 2012 Annual Update is also shown.
Fuel prices since the 2012 Annual Update last December have shown a slight decrease overall, which ranges from $0.001 to $0.074 per litre in all locations except Nova Scotia and Northwest/Nunavut where prices barely increased by $0.005 and $0.003 per litre, respectively. The slightly lower pump prices are due more to short-term seasonal impacts (e.g. off-season demand for recreational fuel use, warmer-than-usual winter temperatures, etc.) keeping downward pressure on oil prices than they are to global economic factors. Recent developments in the crude oil market have not resulted in a material impact on prices. These include disputes between South Sudan and Sudan, an agreed-to ban of oil imports from Iran starting in July by the European Union, and Greece's financial challenges impact on other European economies. Worldwide economic recovery and OPEC's response to increased demand is still a concern keeping prices elevated, as are ongoing worries about stability in major oil supplying countries. Crude oil prices were around US $100/bbl in mid February. The average retail price for regular gasoline during the last week of February 2012 was $1.269 per litre.
| Province/Territory | Current Fuel Price (per litre) |
2012 Annual Update Price |
Pump Price Change |
|---|---|---|---|
| Alberta | $1.027 | $1.092 | ($0.065) |
| British Columbia | $1.193 | $1.267 | ($0.074) |
| Manitoba | $1.089 | $1.150 | ($0.061) |
| New Brunswick | $1.244 | $1.251 | ($0.007) |
| Newfoundland | $1.326 | $1.337 | ($0.011) |
| Northwest/Nunavut | $1.400 | $1.397 | $0.003 |
| Nova Scotia | $1.282 | $1.277 | $0.005 |
| Ontario | $1.226 | $1.254 | ($0.028) |
| Prince Edward Is. | $1.184 | $1.199 | ($0.015) |
| Quebec | $1.287 | $1.288 | ($0.001) |
| Saskatchewan | $1.152 | $1.223 | ($0.071) |
| Yukon | $1.259 | $1.277 | ($0.018) |
In general, fuel prices must change by approximately $0.047 per litre in order to affect a change of $0.005 per kilometer in the reimbursement rate. Pump prices for this update are $0.029 per litre lower on average than those for the 2012 Annual Update, which resulted in either no change or a slight reduction in the recommended reimbursement rates for all locations, withNova Scotia being the one exception where there was a slight increase in the Commuting rate.
Reimbursement Impacts
In developing operating costs, the current average pump price is combined with typical vehicle fuel economy to derive the contribution of gasoline to the per-kilometer operating cost. In order to account for the severe operating conditions prevalent in the Territories, we have adjusted the vehicle fuel efficiency in computing fuel expenses for these locations. Our computations continue to reflect an 80% increase in the rate of fuel consumption on a litres per 100 kilometers basis.
Based on these updated fuel prices, recommended reimbursement rates have either held steady or decreased slightly across the board from the 2012 Annual Update, except for a slight increase in Commuting rate inNova Scotia. The following table shows our recommended reimbursement schedule based on current fuel prices, along with those for the 2012 Annual Update.
| Location | Commuting | Travel | 2012 Annual Update Values Commuting / Travel |
|---|---|---|---|
| Alberta | $0.135 | $0.495 | $0.140 / $0.500 |
| British Columbia | $0.155 | $0.485 | $0.165 / $0.495 |
| Manitoba | $0.140 | $0.455 | $0.145 / $0.460 |
| New Brunswick | $0.160 | $0.495 | $0.160 / $0.495 |
| Newfoundland | $0.170 | $0.520 | $0.175 / $0.520 |
| Northwest | $0.270 | $0.580 | $0.270 / $0.580 |
| Nova Scotia | $0.170 | $0.505 | $0.165 / $0.505 |
| Nunavut | $0.270 | $0.580 | $0.270 / $0.580 |
| Ontario | $0.160 | $0.545 | $0.160 / $0.545 |
| Prince Edward Island | $0.150 | $0.495 | $0.155 / $0.495 |
| Quebec | $0.170 | $0.565 | $0.170 / $0.565 |
| Saskatchewan | $0.145 | $0.440 | $0.150 / $0.445 |
| Yukon | $0.255 | $0.600 | $0.255 / $0.600 |
For both the Commuting and Travel reimbursement rates, the changes from the 2012 Annual Update (reported in December 2011) were all unchanged or decreases of $0.005 or $0.010 per kilometer in the provinces except in Nova Scotia, where the Commuting rate increased by $0.005 per kilometer. Neither the Commuting rate nor the Travel rate changed in any of the Territories. Note that rate changes for the Commuting and Travel rates are not necessarily the same. When rounded to the nearest half-cent, the change in the contribution of gasoline costs to overall vehicle costs results in slightly different rounded total rates.