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CFS Annual Report - 2017

Reimbursement for
Business Use of Personal Vehicles
Model Year 2017

 Study prepared for
The Treasury Board of Canada Secretariat

 by Corporate Fleet Services

  November 2016

1       Executive Summary

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 required to use their personal vehicles while performing government business. This study assesses all vehicle operating expenses and provides recommendations for reimbursement rates for each Canadian Province and Territory.

The present study is based on 2017 model year vehicles and accounts for all of the following:

This report summarizes all assumptions, methodology, values and findings. It presents up-to-date recommended rates of reimbursement for consideration by the Treasury Board of Canada Secretariat.

1.1     Methodology and evaluation

The recommendations are given for the year of 2017 for:

These rates are given on a straight per-kilometre basis, for each Province and Territory. This is intended to accurately account for differences in vehicle operating costs across Canada.

The recommendations are based on total costs of operating privately owned or leased vehicles. In order to reflect realistic conditions, the study assumes an annual driving distance of 20,000 kilometres and ownership terms of both four and five years. Fixed costs include ownership expenses consisting of depreciation, financing or leasing interest and taxes, as well as vehicle insurance and registration. Variable costs cover fuel, preventative maintenance, repairs, tires and miscellaneous items. All cost variations between the Provinces and Territories are accounted for, as well as the special driving conditions in the three Territories.

Weighted average nationwide costs of operating personally owned or leased vehicles were determined to be $0.510 per kilometre versus $0.500 in the previous Fuel Update (for publication on October 1st 2016) and $0.500 in the previous year Annual Report (for publication on January 1st 2016). The slight overall increase in operating costs was primarily due to increased costs of ownership.

The following table indicates Canadian average expenses by cost component as calculated in the current study, in dollars per kilometre:

Cost components

Cost (dollars/km)

Depreciation

$0.175

Interest

$0.007

Sales tax

$0.037

Registration

$0.008

Insurance

$0.089

Fuel

$0.098

Preventative maintenance

$0.052

Repairs

$0.021

Tires

$0.015

Miscellaneous

$0.008

Total

$0.510

The largest component of vehicle operating expenses is depreciation, which accounts for 34.3% of total costs, followed by fuel expenses at 19.2% and insurance premium expenses at 17.4%.

2       Preamble

Corporate Fleet Services (CFS) has been mandated by the Treasury Board of Canada Secretariat to calculate reimbursement rates for business use of personal vehicles by government employees according to the parameters listed in a Statement of Work issued through a competitive RFP process.

CFS is therefore pleased to present this study with its findings and recommendations, based on extensive research performed on behalf of the Treasury Board of Canada Secretariat. 

2.1     Note on methodology

The current study follows strictly the methodology employed in the previous Annual Report (for publication on January 1st 2016). The analysis is deemed to accurately reflect costs in the current Canadian automotive marketplace and is described in detail in Sections 3 through 6.

2.2     Policy recommendations

It is our opinion that public employees continue to be reimbursed for government business use of personal vehicles on a cents per kilometre basis, reflective of the practice that has been in use since 1999. This is deemed to be consistent with current public and private sector practices as well as it accounts for a fair and simple reimbursement method in line with accepted reimbursement policies across Canada.

However, since there are substantial differences among the ten Canadian Provinces and three Territories, these rates are calculated separately for each Province and Territory in order to account for differences in vehicle operating costs.

3       Methodology And Cost Component Determination

3.1     Assumptions

The present study's objective is to determine reimbursement rates for business use of personal vehicles by government employees, as accurately as possible, in order to reflect current Canadian automotive market conditions. In order to accomplish this, an in-depth analysis was performed on all components of the total cost of operating a vehicle.

The methodology employed follows all the elements listed in the Statement of Work and used in the previous annual study. The purpose was to calculate the different rates of reimbursement, in cents per kilometre, separately for all ten Canadian Provinces as well as the three Territories. In light of this we performed research and data analysis to calculate costs for the following components, which represent the total costs of running a personal vehicle:

  1. Fixed expenses
  1. Variable expenses

All calculations assumed four and five year retention periods as well as considered all vehicles to run an average of 20,000 kilometres per year.

In addition, in order to assess current prevalent insurance premiums by Province and Territory, the study used a certain demographic range to reflect the average government employee. The demographics are based on data available from the Treasury Board of Canada Secretariat as well as Statistics Canada. The following characteristics were used, consistent with the parameters used in the previous year study:

The following table gives an overview of the cost proportion of the components involved in total expenses of operating a vehicle:

Expense Cost Proportion
Depreciation 34.3%
Fuel 19.2%
Insurance 17.4%
Interest 1.4%
Preventative maintenance 10.2%
Registration 1.6%
Repairs 4.1%
Sales tax 7.3%
Tires 2.9%
Miscellaneous 1.6%

3.2     Vehicle selection

In order to be reflective of the Canadian marketplace, the same approach as last year was taken. Therefore the current study focused on 53 vehicle models (nameplates) grouped under five vehicle classes for the Provinces, with one extra class for the Territories (pick-up trucks). The models studied account for a significant portion of the Canadian vehicle market and they were deemed representative for the types of vehicles used by government employees.

The following list describes the parameters used:

Make

Model

Class

Weight for Provinces
(rounded)

2017 Model Year Pricing

Honda

Civic

Compact

7.2%

$22,185

Hyundai

Elantra

Compact

5.7%

$22,044

Toyota

Corolla

Compact

5.2%

$22,880

Mazda

3

Compact

3.0%

$23,295

Chevrolet

Cruze

Compact

2.7%

$22,895

Volkswagen

Jetta

Compact

2.4%

$22,420

Volkswagen

Golf

Compact

2.3%

$26,970

Ford

Focus

Compact

1.9%

$22,798

Nissan

Sentra

Compact

1.7%

$21,598

Kia

Forte

Compact

1.4%

$21,555

Toyota

Camry

Mid-Size

1.9%

$26,660

Honda

Accord

Mid-Size

1.5%

$27,585

Ford

Fusion

Mid-Size

1.5%

$25,338

Chevrolet

Malibu

Mid-Size

1.3%

$25,895

Hyundai

Sonata

Mid-Size

1.0%

$26,594

Nissan

Altima

Mid-Size

0.9%

$25,748

Chrysler

200

Mid-Size

0.8%

$27,640

Kia

Optima

Mid-Size

0.5%

$25,255*

Volkswagen

Passat

Mid-Size

0.4%

$27,440

Subaru

Legacy

Mid-Size

0.3%

$26,390

Dodge

Grand Caravan

Minivan

5.8%

$32,040

Toyota

Sienna

Minivan

1.5%

$35,180

Honda

Odyssey

Minivan

1.4%

$32,515*

Kia

Sedona

Minivan

0.5%

$29,735

Chrysler

Town & Country

Minivan

0.4%

$46,990*

Kia

Rondo

Minivan

0.2%

$25,535*

Chrysler

Pacifica

Minivan

0.2%

$39,790

Mazda

5

Minivan

0.2%

$25,090

Toyota

RAV4

Small Crossover/SUV

5.4%

$31,420

Ford

Escape

Small Crossover/SUV

5.0%

$29,789

Honda

CR-V

Small Crossover/SUV

4.8%

$30,315*

Nissan

Rogue

Small Crossover/SUV

4.2%

$29,193

Jeep

Cherokee

Small Crossover/SUV

3.5%

$31,440

Hyundai

Tucson

Small Crossover/SUV

2.8%

$30,694

Hyundai

Santa Fe Sport

Small Crossover/SUV

2.7%

$34,994

Mazda

CX-5

Small Crossover/SUV

2.7%

$30,090*

Ford

Edge

Small Crossover/SUV

2.4%

$36,789*

Chevrolet

Equinox

Small Crossover/SUV

2.0%

$31,070

Jeep

Wrangler

Medium Crossover/SUV

2.2%

$31,735

Jeep

Grand Cherokee

Medium Crossover/SUV

1.7%

$45,740

Ford

Explorer

Medium Crossover/SUV

1.6%

$38,689

Nissan

Pathfinder

Medium Crossover/SUV

1.0%

$37,193

Hyundai

Santa Fe XL

Medium Crossover/SUV

1.0%

$38,944

Honda

Pilot

Medium Crossover/SUV

0.8%

$40,315*

Dodge

Durango

Medium Crossover/SUV

0.7%

$45,740

Toyota

4Runner

Medium Crossover/SUV

0.7%

$46,300*

Chevrolet

Traverse

Medium Crossover/SUV

0.5%

$39,230

GMC

Acadia

Medium Crossover/SUV

0.4%

$39,695

* Note: The current study used 2016 pricing for nine vehicles for which prices were not yet available for 2017.-

Distribution of vehicles studied by class

Vehicle Class Distribution
Compact 34%
Medium Crossover/SUV 11%
Mid-size 10%
Minivan 10%
Small Crossover/SUV 35%

 

Distribution of vehicles studied by brand name

Brand Name Distribution
Chevrolet 6.5%
Chrysler 1.4%
Dodge 6.5%
Ford 12.3%
GMC 0.4%
Honda 15.8%
Hyundai 13.2%
Jeep 7.3%
KIA 2.7%
Mazda 5.9%
Nissan 7.9%
Subaru 0.3%
Toyota 14.7%
Volkswagen 5.1%

3.3     Data sources

The present study used information available in the public domain, data from previous studies that we have performed, as well as new research and consultations with specialized professionals and agencies. For each element studied we confirmed the accuracy of the data by consulting additional data sources and cross-referencing the findings. All data sources were assessed for reliability and were thoroughly documented.

3.4     Use of weighted averages

In order to accurately reflect current market conditions, same as in the previous year report, the present study follows a weighted average approach instead of a simple average, by employing weighted arithmetic means where relevant. This was deemed necessary because not all elements calculated contribute the same amount to the total. For example, according to the most recent information published by Statistics Canada, there were a total of 7,866,332 light duty vehicles registered in Ontario, whereas in the Yukon there were only 31,960 vehicles registered, and thus the two regions contribute significantly different amounts to the overall Canadian average. This method was employed throughout the study to better reflect the reality of the Canadian market.

In the same manner, certain vehicle models sell significantly more units on the Canadian market than others and therefore contribute more to the overall weighted average. For example, the Honda Civic sells considerably more units in Canada than the Mazda 3, more than double that amount, and therefore the operating costs for the Honda Civic should reflect proportionately in the total calculated weighted average for each component of the cost. See Section 3.2 - Vehicle selection for details.

4       Fixed Expenses Analysis

4.1     Ownership costs

4.1.1     Current model-year vehicle prices

4.1.1.1       Vehicle pricing

For each vehicle under study, we have extracted 2017 model year MSRP (Manufacturer Suggested Retail Price) values. The main tool employed was AutoQuote, the industry leading software that provides up-to-date detailed pricing for all new vehicles available on the Canadian market. At the time of the current study, pricing was not yet available for nine (9) vehicle models out of a total of 53. For these, 2016 model year values were used, as in our experience these values vary only slightly from year to year and are generally reflective of 2017 values.

MSRP pricing is established by the manufacturers for the whole model year and is valid across Canada. Variations of the MSRP prices throughout the year are infrequent. Values extracted from AutoQuote were also cross-checked against the information published by vehicle manufacturers.

On average, MSRP prices for vehicles studied increased by approximately 2.25% compared to the previous year.

4.1.1.2       Prevalent manufacturer rebates

Vehicle manufacturers usually offer retail rebates for new vehicles in order to promote sales and distinguish themselves from their competition. We have thus performed substantial research to determine prevalent retail rebates for all vehicles studied, for the last 12 months. A period of one year was used as retail rebates vary from month to month as well as from region to region. Prevalent retail rebates display variation by:

All the data obtained was integrated into a 2,067 data-points matrix and subsequently reflected in the purchase price of each vehicle, by Province. Direct price negotiation between vehicle retailers and buying individuals could not be accounted for in this study.

Rebates range from $0 to $8,455, depending primarily on each manufacturer's marketing strategy, with an average of approximately $1,450.

Over the last year, vehicle manufacturer rebates decreased on average by $430 or 23%.

4.1.1.3       Federal and provincial levies

Provincial and federal levies apply to the purchase of new vehicles, and are intended in principle to offset environmental costs such as disposal and recycling of air conditioning fluids or tires. For the vehicles under study the following levies apply:

All applicable fees and levies have been factored in the analysis.

4.1.2     Method of vehicle acquisition

We have performed research on the Canadian market to establish which methods of vehicle acquisition are the most prevalent, as well as what market share is held by each. We have therefore come to the conclusion that in Canada the new vehicle market is distributed among the following three forms of acquisition:

In comparison to the previous year, a slight shift from cash purchases towards leasing was observed. The lower interest rates offered by manufacturers supported this trend. Please refer to Section 4.1.5 for details.

Therefore, in order to accurately reflect the reality of the market, we have analysed all three forms of acquisition and subsequently calculated a weighted average for each vehicle under study according to their proportion of the market.

The net cost of vehicle ownership was calculated according to the method of acquisition (cash, financing or leasing). All three vehicle acquisition methods were addressed with their specific particularities, proportionately with their prevalence in the Canadian automotive landscape, as follows:

4.1.3     Four and five year retention periods

We calculated ownership costs for both four and five-year retention periods, terms that were found to be reflective of average retention periods for the Canadian automotive landscape. All calculations were performed by vehicle and per Province taking into account both retention periods, and the results were averaged to yield one value per vehicle and per Province or Territory.

4.1.4     Vehicles driven 20,000 kilometres annually

All vehicles under study were considered to be driven 20,000 km per year. This is deemed to be a reasonable benchmark to base all reimbursement calculations on, since the average Canadian vehicle is driven between 16,000 and 24,000 km per year. All calculations were made using this benchmark all across Canada.

4.1.5     Financing interest rates

We have performed an in-depth research to determine the prevalent interest rates provided by vehicle manufacturers. The manufacturers offer what is known as subvented rates to promote sales of new vehicles. These rates are typically substantially lower than regular financial institutions' loans. Since these reduced rates are prevalent on the market, we deemed it reflective of reality to integrate these rates into our calculations.

Interest rates vary considerably by:

All these variations were integrated into a 2,756 data-points matrix and subsequently reflected in the ownership costs of each vehicle, by Province and Territory.

For the current study all vehicle models studied had manufacturer-established interest rates available for 4 and 5 year financing. However, while all the manufacturers studied offered subvented leasing rates, some did not offer them for certain models on 5-year leasing terms. In these instances, average market (financial institutions or third party leasing company) rates were used.

All interest rates (financing and leasing) varied from 0% to 4.99% for manufacturers' subvented rates, while the third-party interest rates were approximated at 8%. The average interest rate for lease contracts was 2.78% while the financing rate was 1.32%. Overall, interest rates decreased on average by 21% versus the previous year.

4.1.6     Sales taxes

Federal and provincial sales taxes (GST, PST, QST, HST) apply to the full cost of a new vehicle according to the taxation method of each Province or Territory. Sales taxes also apply to:

Whether a vehicle is cash-purchased, financed or leased, taxes apply differently. For both cash purchases and financing contracts, the full price of a new vehicle is subject to sales tax, whereas for leased vehicles sales tax is only applied to monthly lease payments (including tax on interest).

Sales taxes have been factored into all calculations as to accurately reflect the direct costs to the end user of a vehicle. Following is a table listing the combined GST/PST/QST/HST applicable for each Province and Territory for the period relevant to the current study:

Sales taxes in Canada

Province

Combined sales taxes

Alberta

5%

British Columbia

12%

Manitoba

13%

New Brunswick

15%

Newfoundland and Labrador

15%

Nova Scotia

15%

Northwest Territories

5%

Nunavut

5%

Ontario

13%

Prince Edward Island

15%

Quebec

14.975%

Saskatchewan

10%

Yukon

5%

 

4.1.6.1       Taxes on fuel

Fuel prices listed at the pump have all taxes included, as is the standard throughout Canada. Fuel is usually taxed federally, provincially as well as regionally. Approximately a third of the price paid at the pump is made up of the following:

Fuel prices listed at the pump have all taxes included, as is the standard throughout Canada. Fuel is usually taxed federally, provincially as well as regionally. Approximately a third of the price paid at the pump is made up of the following:

All fuel prices given in the present study have all taxes included.

4.1.6.2       Taxes on insurance premiums

Regular sales tax (GST/PST/QST/HST) does not apply to insurance premiums anywhere in Canada. However, a tax on insurance premiums of 9% applies to automobile insurance in the Province of Quebec and 4% in Nova Scotia, charged to consumers similarly to sales taxes. Newfoundland and Labrador introduced a Retail Sales Tax of 15% on July 1st 2016, applicable to insurance premiums. Insurance premiums given in the present study have these taxes included.

4.1.6.3       Recent and upcoming tax rate changes

In 2016, three Canadian Provinces increased their HST (Harmonized Sales Tax) to 15%: Newfoundland and Labrador (effective July 1st 2016), New Brunswick (effective July 1st 2016) and Prince Edward Island (effective October 1st 2016). The new HST (15%) is reflected in all calculations for these three Provinces.

We have consulted directly with all relevant public sources in order to determine if there are any impending tax rate changes across Canada in the near future. At this time, no other changes in sales taxes are foreseen anywhere in Canada.

For each subsequent update of the present study, research will be performed again for all Canadian Provinces and Territories to determine if tax amounts have changed or if any changes are foreseen in the future.

4.1.7     Resale values (vehicle remarketing)

In order to accurately assess total costs of vehicle ownership an analysis was performed, for each vehicle under study, to project resale values for retention periods of four and five years, based on historic patterns. Resale values were extracted from resale market data for the same or similar vehicle model. The research was based on:

The values were extracted from the Canadian Black Book, an industry standard for establishing values for used cars and were supported through consultation with specialized vehicle resellers, as well as employing other relevant tools. Final values were projected for:

Resale values were integrated into the depreciation analysis differently depending on the type of acquisition, as follows:

On average, vehicle resale values were slightly higher than the previous year, by 3% for 4 year-old vehicles and 2% for 5 year-old vehicles. Similarly to last year, the lower Canadian dollar value as compared to the US dollar encouraged remarketers from the USA to purchase used Canadian vehicles, increasing the demand and, as a result, driving resale values higher.

4.1.8     Total cost of ownership calculations

For each Province and Territory, total costs of ownership were calculated for:

A weighted average was then performed for all vehicles under study to yield a final cost-of-ownership figure per Province and Territory. All figures were converted and expressed in dollars per kilometre.

The following three tables give a detailed break-down of vehicle ownership costs in Canada in dollars per kilometre,  by vehicle class as well as four and five year retention periods, split by depreciation costs, financing costs (interest) and sales taxes, as well as a weighted average according to vehicle sales figures:

DEPRECIATION

Compact

Mid-Size

Minivan

Small Crossover/
SUV

Medium Crossover/
SUV

Weighted average

4 -yr ownership

$0.156

$0.189

$0.186

$0.192

$0.229

$0.183

5 -yr ownership

$0.140

$0.165

$0.165

$0.178

$0.210

$0.167
           

$0.175

---

INTEREST

Compact

Mid-Size

Minivan

Small Crossover/
SUV

Medium Crossover/
SUV

Weighted average

4 -yr ownership

$0.003

$0.005

$0.008

$0.003

$0.009

$0.006

5 -yr ownership

$0.004

$0.006

$0.009

$0.005

$0.011

$0.007
           

$0.007

---

SALES TAX

Compact

Mid-Size

Minivan

Small Crossover/
SUV

Medium Crossover/
SUV

Weighted average*

4 -yr ownership

$0.031

$0.036

$0.041

$0.042

$0.054

$0.040

5 -yr ownership

$0.025

$0.029

$0.034

$0.035

$0.045

$0.034
           

$0.037

* Note: total weighted averages are rounded to 3 decimals.

4.1.9     Costs of ownership changes from the previous year

While an increase in MSRP prices and decreased rebates lead to an increase in overall ownership costs, lower interest rates and higher resale values have the opposite effect, somewhat offsetting the increase in prices. The overall result is that total ownership costs only increased slightly for the ten Canadian Provinces (by approximately 3% on average versus the previous year or $0.007 per kilometre). On the other hand, for the Territories, total ownership costs increased by approximately 8% or $0.020 per kilometre.

4.2     Vehicle registration and licensing costs

Vehicle registration, licensing and plating is regulated at the provincial level. Each Canadian Province and Territory has its own regulatory body governing the rules and costs of vehicle licensing. Registration costs are typically charged annually in the form of a registration renewal. In some Provinces there are certain one-time up-front costs that are charged only at the time of the initial vehicle registration.

We have performed a complete study of these costs by contacting all Provincial and Territorial authorities. Registration costs do not have additional taxes applied to them as payment is made directly to the respective governmental agencies. The terms registration and licensing are used interchangeably in this study.

Registration costs vary by:

All these costs have been integrated in the calculations for each Province and Territory. Annual registration costs vary on average between $42 and $262 and contribute an average of $0.008 per kilometre (weighted average for all of Canada).

The following table lists annual registration costs for all the Provinces and three Territories:

Province/Territory

Annual
registration costs

Registration costs
in $/km

Alberta

$84.45

$0.004

British Columbia

$61.00

$0.003

Manitoba

$161.00

$0.008

New Brunswick

$108.00

$0.005

Newfoundland and Labrador

$180.00

$0.009

Nova Scotia

$110.85

$0.006

Ontario

$120.00

$0.006

Prince Edward Island

$130.00

$0.007

Quebec

$262.82

$0.013

Saskatchewan

$68.00

$0.003

Northwest Territories

$83.00

$0.004

Nunavut

$68.40

$0.003

Yukon

$42.00

$0.002

 

4.2.1     Note on the Province of Quebec

It must be noted that in Quebec, provincially-regulated bodily injury insurance must be purchased through the annual vehicle registration process. This is the reason why registration costs in Quebec are generally higher than the other Provinces or Territories.

4.3     Vehicle insurance costs

4.3.1     Regulation of vehicle insurance

Insurance rates vary greatly across Canada, primarily due to different provincial laws determining vehicle accident fault, subrogation or no-fault policies. Vehicle insurance is offered by private insurers in Alberta, Ontario, Quebec as well as the four Atlantic Provinces and the three Territories. Quebec however has a hybrid system where bodily injury insurance is provided by the Province through its vehicle registration process, while third-party liability is provided by private insurers. On the other hand, the Provinces of British Columbia, Manitoba and Saskatchewan have mandatory public vehicle insurance. Insurance in these three Provinces is offered exclusively by the provincial governmental bodies that also regulate vehicle registration.

4.3.2     Variability of insurance premiums

Insurance premium rates vary considerably not only from Province to Province, but also according to a substantial number of other parameters related to the insured driver's personal characteristics as well as to the vehicle being insured. Where insurance is offered privately, insurance premiums also vary considerably from one insurer to another.

4.3.3     Analysis of prevalent insurance premiums

In order to maintain consistency with the methodology employed in the previous year's study, we have performed a thorough research into current prevalent insurance premium rates for the average government employee to keep these figures in line with current market conditions.

Insurance premium costs were assessed based on the average government employee as described in Section 3.1. We requested over 230 quotes based on this established demographic directly from private insurers, provincial insurers as well as insurance brokers. In order to reflect real up-to-date insurance premiums for each Province with private insurance, more than five different data sources were used. For Provinces with public insurance the data available from the governing bodies was used.

Following is a table listing average insurance premiums for the ten Provinces and three Territories as well as a comparison with the insurance premiums published in the previous year study, for direct comparison (averaged annual premiums have been rounded up to the nearest $25):

Province/Territory

Current insurance premiums

Insurance costs
in $/km

 Previous year report
insurance premiums

Alberta

$1,625

$0.081

$1,525

British Columbia

$1,450

$0.073

$1,300

Manitoba

$1,250

$0.063

$1,225

New Brunswick

$1,425

$0.071

$1,300

Newfoundland and Labrador

$1,900

$0.095

$1,675

Nova Scotia

$1,375

$0.069

$1,300

Ontario

$2,550

$0.128

$2,525

Prince Edward Island

$1,150

$0.058

$1,075

Quebec

$1,025

$0.051

$1,075

Saskatchewan

$1,350

$0.068

$1,300

Northwest Territories

$1,775

$0.089

$1,725

Nunavut

$1,775

$0.089

$1,725

Yukon

$2,025

$0.101

$1,975

The values obtained through the present study are deemed to be reflective of the current reality for the established demographic. Insurance rates vary between $1,025 and $2,550, with a Canadian weighted average of $0.089 per kilometre.

5       Variable Expenses Analysis

5.1     Fuel expenses

Fuel expenses are directly related to three main factors: buying location, fuel consumption of the vehicle and time of the year. The current study focuses on gasoline prices across Canada, which are strongly related to variations in the world energy market.

5.1.1     Energy Market Context

The global energy market continues to exhibit a high volatility. During the last three months, world crude oil prices per barrel have been fluctuating between $43 USD and $53 USD. The optimism for a possible OPEC agreement to cut oil production accompanied by reduced crude inventory levels in the U.S. pushed the oil prices upwards by approximately 20% in October as compared to the previous month. However, the indications for a successful agreement have diminished and climbing inventories have caused the prices to decrease in November.

Similarly, fuel prices have been following the general trends of crude, however, the variations have been considerably less pronounced. During the three-month period from September through November 2016, the average fuel prices across Canada remained fairly consistent, exhibiting a slight downward trend in November which was mainly influenced by the arrival of cheaper winter-grade gasoline.

5.1.1.1       Global Crude Oil Demand

According to the quarterly World Economic Outlook (WEO) report published by the International Monetary Fund (IMF) in October 2016, the global crude oil growth projections remain unchanged at 3.1% for 2016 and 3.4% for 2017. The uncertainty caused by the UK vote in favour of leaving the European Union (Brexit), along with slower-than-expected growth in the US in the first part of the year and continuously low crude prices, continue to apply downward pressure on the global economy.

The growth rate in advanced world economies is estimated at 1.6% for 2016, a reduction from 2.1% in 2015 as reported by IMF in November. UK's current economic growth is fairly strong and is projected at 1.8% for 2016, however, because of the Brexit a further slowdown is anticipated next year with a growth rate estimated at 1.1% (a reduction of 0.2% versus the estimate in the July 2016 report). Meanwhile, Germany, France and Spain, along with several other Euro Zone countries have improved growth projections.

On this side of the Atlantic, despite continued reduction of unemployment, the U.S. economic growth has been slower than expected. The growth prognosis has been reduced by 0.6% as compared to IMF report of July 2016 and is now at 1.6%.

Emerging and developing markets on the other hand are expected to grow by 4.2% on average, which is an improvement after five consecutive years of decline (from 7.5% in 2010 to 4.0% in 2015).  The growth prognosis in India remains strong and China's economic restructuring is also showing positive signs. On the other hand, Brazil and Russia are still expected to register an economic contraction this year (3.3% and 0.8% respectively) while only returning to positive growth rates in 2017.

According to the IMF, Canadian economic performance has been slower than expected, leading to decreased growth rate projections of 1.2% this year and 1.9% for the following year – a reduction of 0.2% from the last quarterly report in July 2016. Similarly, the Bank of Canada Monetary Policy Review from October 2016 also indicates a reduction of the GDP growth rate by 0.2%, with the rates estimated at 1.1% for 2016 and 2.0% for 2017. Declining investments in the energy sector are seen as the main factor slowing economic growth.  On the upside, the service sector is expanding and the lower Canadian dollar directly supports exports.

Overall, global demand for crude oil remains strong. The OPEC Monthly Oil Market Report (published in November 2016) indicates that the final numbers for crude oil demand is expected to show an increase of 1.23 million barrels per day (mb/d) or 1.3% in 2016, averaging 94.40 mb/d. The 2017 demand is further expected to increase by an estimated 1.2%, reaching 95.55 mb/d.

5.1.1.2       Global Crude Oil Supply

Globally, the crude oil supply growth this year has been substantially lower than last year. OPEC reported that from January to September the global oil supply grew by only 0.3 mb/d compared to an increase of almost 3.0 mb/d during the same period last year. Despite the fact that non-OPEC production has decreased by 1.4% this year, the increase by OPEC countries has completely offset this reduction. According to the International Energy Agency (IEA), the OPEC production reached a record high of 33.83 mb/d in October - an increase of 4.0% since a year ago.

To stabilize the oil market and boost prices, the U.S., along with China, has been cutting production in 2016. The U.S. Energy Information Administration estimates a U.S. supply decrease of 9.4%, averaging 8.8 mb/d this year. It is likely that further cuts will follow in 2017, even if not as substantial as previously.

Despite the fact that Saudi Arabia exhibited a slight dip in production during the first quarter of 2016, the production in the second and third quarters has been quite strong. From January to September, Saudi Arabia has increased their production by 5.9%. During the same time period, Iran has hiked their production rate by 30.4% (averaging 3.65 mb/d in the third quarter), rapidly approaching their production goal of 4.00 mb/d.

For over a year, OPEC has been attempting to reach an agreement to cut or at least freeze the production levels to stabilize global crude prices. During a meeting in Algiers at the end of September, a preliminary agreement was finally reached. This pushed the global crude prices up by more than 20% in October. Firm agreement details were to be developed in the months following the meeting. The process of determining the target cut for each of the 14 participating countries has been complex, because many of them continue to increase their production levels even after the initial agreement was made. Saudi Arabia has urged non-OPEC countries to participate in the cuts, but this suggestion has not met with much support (e.g. Brazil and Mexico have already indicated that that their participation in such agreement would be unlikely). Notably, if the agreement of OPEC production cuts is reached in the next meeting in Vienna on November 30th, it would likely push the oil prices upwards, stimulating production growth in countries that did not participate in the agreement (e.g. the U.S.).

In the three-month period from September to November, crude prices were comparatively lower in September and November, reaching a period low of $43 USD per barrel in the case of the West Texas Intermediate (WTI) and $44 USD per barrel for the Brent price. In October, however, prices gained some momentum reaching a period maximum – the WTI almost reached $52 USD per barrel on October 19th and the Brent price was at $53 USD per barrel on October 10th. The increase was mainly fuelled by the expectations of finalizing the OPEC production cut agreement as well as reports of declining U.S. oil inventory levels.

For context, the OPEC's reference basket price (calculated as a weighted average of prices of crude oil produced by OPEC countries) increased from $42.68 USD per barrel in July to $47.87 per barrel in October.

5.1.2     Gasoline prices across Canada

Fluctuations of gas prices across Canada have been moderate in the last three months. They roughly followed crude oil price variations, with the exception of the effect of two major incidents in the U.S. Both incidents took place on the Colonial pipeline that is largest U.S. refined product pipeline system that carries products from the Gulf of Mexico to the North-East U.S. and Canada. On September 9th a leak was discovered on the Colonial pipeline that resulted in a 12-day interruption of refined product flow to the North-East. As a result, gas prices in Canada were driven up by several cents (e.g. Toronto saw an increase of 5 cents per litre). The second accident happened only a few miles away, when heavy equipment hit the pipeline, causing a blast on the 31st of October. The pipelines operation was interrupted for six days, however, the effect on gasoline prices was moderate.

In November, gasoline prices decreased as the cheaper-to-produce winter grade fuel reached the market. On the other hand, since a large part of the gasoline used in Canada is imported from the U.S., the low Canadian dollar is continuing to apply an upward pressure on fuel prices.

Additionally, in early October, the Federal government announced plans to require all Canadian Provinces to develop a plan by 2018 to reduce carbon emissions. This announcement followed the Paris Agreement that was reached in December 2015, but went into effect on November 4th 2016 and is aimed at reducing global greenhouse gas emissions. The Federal plan is to set a minimum price for carbon beginning in 2018. By 2022, the carbon price is to reach $50 per tonne, effectively adding 11 cents per litre to the price of gasoline at the pump. Two Canadian Provinces (i.e. British Columbia and Quebec) have carbon reduction programs already in place, while Alberta is introducing a carbon tax of 4.5 cents per litre in January 2017. Ontario is also adopting a carbon credits auction system in March 2017. The direct effects of these measures on gasoline price will be reported in the following Fuel Price updates.

The trend of future prices at the pump is difficult to predict with any degree of confidence. Factors such as disruptions of supply due to unforeseen events, record-high inventories, new governmental regulations, OPEC meetings and agreements, as well as economic conditions of the major economies could all have a considerable influence on gasoline prices in Canada. The current energy market still displays signs of volatility that adds to the seasonal effects of switching to winter-grade gasoline as well as the impact of record inventories of fuel.

In Canada, prices of gasoline at the pump include all applicable taxes. Prices vary significantly across the country, mainly due to the difference in the types and amounts of taxes being charged in the different Provinces and Territories.

According to Natural Resources Canada, over 90% of light duty vehicles on Canadian roads run on gasoline. A number of these vehicles are also equipped to be able to run on E85 (ethanol 85%), but for the purpose of the present study all vehicles were considered to run on regular gasoline, as E85 is not readily available at retail outlets.

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. We have therefore researched the average prices of regular gasoline charged at the pump.

Consistent with the methodology of the previous study, when determining average gasoline prices per Province or Territory, we have used a weighted average according to population in order to better conform to reality. In this manner, metropolitan population centers account for a greater portion of the total than smaller municipalities.

The current report required an update in its methodology for assessing average gasoline prices across Canada due to changes in reporting frequency reflected on National Resources Canada's website. Its main source of gasoline price data, Kent Group, changed from weekly reporting to daily reporting (with the exception of Saturdays and Sundays). Additionally, a number of supplemental locations were added to reporting, thus bringing the total number of municipalities studies to 71. This approach did not have any substantial effect on the outcome of the calculations. This data was verified against additional databases made available by third parties that similarly track fuel prices all across Canada.

Fuel price data was extracted for a period of three months (September 6th to November 25th 2016) in order to better reflect current prices. Gasoline prices in Canada varied during this period between $0.791 in Edmonton, AB to $1.371 in Gander and Grand Falls, NL, with a national average of $1.057. Subsequent fuel update reports will focus on three months periods following the period covered in the present study.

The following is a table with average regular gasoline prices for all Canadian Provinces and Territories, in dollars per litre, as well as gasoline prices from previous update reports, for comparison:

Province/Territory

Current fuel price ($/litre)

Current fuel cost ($/km)

1 Oct 2016 update ($/litre)

1 Jul 2016 update ($/litre)

1 Apr 2016 update ($/litre)

1 Jan 2016 (Annual Report) ($/litre)

Alberta

$0.913

$0.085

$0.962

$0.875

$0.785

$1.009

British Columbia

$1.205

$0.112

$1.197

$1.128

$1.108

$1.178

Manitoba

$0.942

$0.088

$1.018

$0.896

$0.813

$1.012

New Brunswick

$1.040

$0.097

$1.001

$0.944

$0.925

$0.992

Newfoundland and Labrador

$1.300

$0.121

$1.237

$0.998

$0.962

$1.065

Nova Scotia

$1.040

$0.097

$1.002

$0.972

$0.927

$0.999

Ontario

$1.018

$0.095

$1.031

$0.988

$0.940

$1.015

Prince Edward Island

$1.033

$0.096

$1.003

$0.964

$0.929

$1.007

Quebec

$1.111

$0.104

$1.060

$1.034

$1.015

$1.099

Saskatchewan

$0.945

$0.088

$0.993

$0.897

$0.811

$1.036

Northwest Territories

$1.160

$0.145

$1.202

$1.074

$1.052

$1.223

Nunavut

$1.128

$0.141

$1.128

$1.128

$1.182

$1.269

Yukon

$1.159

$0.145

$1.164

$1.022

$0.999

$1.198

 

5.1.2.1       Upcoming fuel-related changes in Alberta and Ontario

Gasoline prices in Alberta are due to be raised by virtue of the Province adding a 4.49 cents tax per litre of gasoline. The hike in fuel tax is due to come in effect on January 1st 2017. In Ontario, gasoline prices are expected to rise due to the Province implementing a carbon credits auction system projected to come into effect in March 2017.

However, the methodology of the current report restricts the adjustments of the fuel component to the market data from the past three months, thus not reflecting the scheduled changes expected in Alberta and Ontario in 2017. The following Fuel Updates will reflect these changes as well as any other variations in the fuel market.

5.1.3     Fuel consumption

For each vehicle under study, fuel consumption figures were extracted from two main sources, namelyNatural Resources Canada's EnerGuide and the industry's vehicle pricing and specification standard tool, AutoQuote. For models where 2017 model year figures were not available, 2016 figures with similar engine sizes were used. These figures were correlated back to last year's consumption figures to check for consistency. Fuel consumption figures are determined by vehicle manufacturers, based on standardized tests, and are published for both city driving and highway driving.

In Provinces where the majority of the population lives in large urban centres (e.g. Ontario) vehicles are driven more under city-driving conditions rather than highway-driving conditions. In light of this fact, the percentage of city versus highway driving has been referenced to a 60/40 city/highway split. On the other hand, for the Territories, a reversed 30/70 city/highway split was factored in, due to the predominantly rural character of the Territories and long distances to be covered.

The following table gives average fuel consumption figures by class of vehicle, in litres of gasoline per hundred kilometres:

Fuel consumption (l/100 km)

Compact

Mid-Size

Minivan

Small Crossover/
SUV

Medium Crossover/
SUV

Truck

Weighted average

Provinces

7.7

8.5

11.6

9.6

12.1

-

9.3

Territories

-

-

-

9.6

12.1

12.3

11.2

 

5.1.4     Calculation of fuel expenses

Based on an average of 20,000 kilometres per year and following the methodology described above, the study calculated average costs, per Province or Territory, for all vehicles under study. These numbers were weight-averaged according to population to yield individual fuel costs figures for each Province or Territory.

Fuel contributes on average $0.098 per kilometre to total operating costs, ranging from $0.085 in Alberta to $0.162 in the Northwest Territories and the Yukon. Future changes will be reported in the next Fuel Update report.

5.2     Vehicle maintenance expenses

In order to keep a vehicle in proper running condition and respect all driving safety requirements, a vehicle must be adequately maintained. Vehicle maintenance involves the following:

5.2.1     Preventative maintenance

Preventative maintenance includes, but is not limited to, the following:

Costs of preventative maintenance were estimated based on previous studies as well as through consultation with specialized garages and qualified mechanics in order to update the frequency and costs for parts and labour. Where applicable, the inflation rate has been factored in, as calculated by Statistics Canada. Sales taxes apply to all preventative maintenance costs.

Our research regarding costs for vehicle maintenance revealed a general trend in the industry for newer vehicles to have less servicing needs, counterbalanced by a general increase in service costs.

In line with the above, the current report adjusted the frequency of key preventative maintenance jobs for specific vehicles (notably for North American manufacturers) to reflect the current reality. In conclusion, changes in vehicle maintenance and repairs did not result in any significant changes versus the previous year report. 

5.2.2     Projected costs of repairs not covered by manufacturer warranty

Since the current study is considering retention periods of four and five years, a certain cost for projected repairs must be taken into account. Repairs due to accidents are covered by insurance and are reflected in insurance premiums costs. Most manufacturers offer warranties of up to 3 years or 60,000 kilometres (with the exception of Kia, Hyundai, Volkswagen and Mazda, which offer longer warranties). Beyond this period or mileage, any mechanical system that breaks down will incur a direct cost to the owner.

5.2.3     Tires

The various vehicles under study have different tire requirements, mostly due to different rim sizes. All new vehicles come with a set of standard all-seasons tires. However, if only one set of tires is used, they wear out and need to be replaced, on average after 60,000 kilometres. This implies that at least one new set of tires must be purchased for both four and five year retention periods.

For the purpose of this study, average quality all-seasons tires were considered. Costs of tires vary between $600 and $1,200 for a set of four, mainly depending on the type and size, plus applicable taxes.

5.2.3.1       Adjustments for Quebec and British Columbia

The Province of Quebec mandates the use of winter tires for all light duty vehicles, for the period between December 15th and March 15th. In order to reflect this requirement a 50% increase in cost of tires was factored into the calculations. This accounts for purchasing an additional set of winter tires while offsetting the need to purchase another set of all-season tires for the four-year retention period studied but not necessarily for the five-year period.

In British Columbia, certain roads, especially in mountainous areas mandate the use of winter tires, usually between October 1st and March 31st. A 25% increase in costs of winter tires was factored in the calculations to account for this requirement, in order to reflect the fact that winter tires are only used by a certain portion of vehicles registered in this Province.

5.2.4     Miscellaneous maintenance expenses

There are other common expenses related to maintaining a vehicle that do not fall under the previous three categories but which are necessary for safety as well as aesthetic reasons. The present study continued along the same lines as the previous year's study and allocated a $10 per month allowance for miscellaneous costs such as windshield washer fluid, occasional car wash and polish, light bulbs etc.

5.2.5     Total costs related to vehicle maintenance

Total maintenance costs were calculated for every Province and Territory. Costs are higher for Quebec and British Columbia mainly due to winter tire regulations. Costs for the three Territories are also higher primarily due to the extra equipment needed to support driving conditions in the North, as detailed in Section 6. Costs are lower for the Province of Alberta mainly due to the fact that there is no provincial sales tax applicable.

The following four tables give a full break-down of vehicle maintenance costs in dollars per kilometre,  by vehicle class as well as four and five year retention periods, split by preventative maintenance, repairs, tires and miscellaneous, as well as weighted averages according to vehicle sales:

PREVENTATIVE MAINTENANCE

Compact

Mid-Size

Minivan

Small Crossover/
SUV

Medium Crossover/
SUV

Weighted Average*

4 –yr ownership

$0.047

$0.047

$0.044

$0.048

$0.047

$0.048

5 –yr ownership

$0.054

$0.055

$0.055

$0.055

$0.057

$0.056
           

$0.052

 ---

REPAIRS

Compact

Mid-Size

Minivan

Small
Crossover/
SUV

Medium
Crossover/
SUV

Weighted
average*

4 -yr ownership

$0.011

$0.012

$0.008

$0.012

$0.009

$0.013

5 -yr ownership

$0.026

$0.027

$0.026

$0.028

$0.027

$0.028
           

$0.021

 ---

TIRES

Compact

Mid-Size

Minivan

Small
Crossover/
SUV

Medium Crossover/
SUV

Weighted average*

4 -yr ownership

$0.013

$0.015

$0.017

$0.016

$0.020

$0.016

5 -yr ownership

$0.010

$0.012

$0.014

$0.012

$0.016

$0.013
           

$0.015

 ---

MISCELLANEOUS

Compact

Mid-Size

Minivan

Small
Crossover/
SUV

Medium Crossover/
SUV

Weighted average*

4 -yr ownership

$0.007

$0.007

$0.007

$0.007

$0.007

$0.008

5 -yr ownership

$0.007

$0.007

$0.007

$0.007

$0.007

$0.008
           

$0.008

* Note that the total weighted averages are rounded to 3 decimals.

6       Operational Costs in The Territories

In order to accurately reflect actual costs of operating vehicles in the three Canadian Territories, the analysis required a different approach than for the ten Provinces. The Territories are mostly rural and driving conditions are harsher, especially in the winter-time. This means that prevalently larger vehicles are used with winter-adapted equipment and therefore the costs for maintenance, tires, fuel and specialized equipment are higher.

This section describes the methodology used for the Territories as well as highlights where it differs from the methodology used for the ten Provinces.

6.1     Vehicle selection for the Territories

The nature of the climate and road conditions in the three Territories is considerably different than for the ten Provinces. Due to this fact, as well as the harsh winter driving conditions that drivers face in the North, the automotive landscape has a different make-up, and as a result trucks and crossovers/SUVs are significantly favoured over compact, mid-size sedans or minivans. Following this rationale, the present study selected three vehicle classes that were deemed representative for the Territories, same as in the previous Annual Report:

The study kept the vehicles studied in the Small and Medium Crossover/SUV categories, added the five most sold pick-up trucks in the Truck category and eliminated the Compact, Mid-size and Minivan classes.

Following is a table listing the vehicles studied for the Territories, as well as the class they belong to and the weight assigned to each according to recent Canadian sales:

Make

Model

Class

Weight for Territories (rounded)

2017 Model Year Pricing

Toyota

RAV4

Small Crossover/SUV

6.5%

$31,420

Ford

Escape

Small Crossover/SUV

5.9%

$29,789

Honda

CR-V

Small Crossover/SUV

5.7%

$30,315*

Nissan

Rogue

Small Crossover/SUV

5.0%

$29,193

Jeep

Cherokee

Small Crossover/SUV

4.2%

$31,440

Hyundai

Tucson

Small Crossover/SUV

3.3%

$30,694

Hyundai

Santa Fe Sport

Small Crossover/SUV

3.2%

$34,994

Mazda

CX-5

Small Crossover/SUV

3.2%

$30,090*

Ford

Edge

Small Crossover/SUV

2.8%

$36,789*

Chevrolet

Equinox

Small Crossover/SUV

2.3%

$31,070

Jeep

Wrangler

Medium Crossover/SUV

2.6%

$31,735

Jeep

Grand Cherokee

Medium Crossover/SUV

2.0%

$45,740

Ford

Explorer

Medium Crossover/SUV

1.9%

$38,689

Nissan

Pathfinder

Medium Crossover/SUV

1.2%

$37,193

Hyundai

Santa Fe XL

Medium Crossover/SUV

1.1%

$38,944

Honda

Pilot

Medium Crossover/SUV

1.0%

$40,315*

Dodge

Durango

Medium Crossover/SUV

0.8%

$45,740

Toyota

4Runner

Medium Crossover/SUV

0.8%

$46,300*

Chevrolet

Traverse

Medium Crossover/SUV

0.6%

$39,230

GMC

Acadia

Medium Crossover/SUV

0.5%

$39,695

Ford

F-Series

Truck

19.5%

$43,899

Ram

P/U

Truck

11.8%

$48,040

GMC

Sierra

Truck

6.7%

$46,320

Chevrolet

Silverado

Truck

5.9%

$42,095

Toyota

Tacoma

Truck

1.6%

$42,205

* Note: The current study used 2016 pricing for the vehicles for which prices were not yet available for 2017.

It should be noted that by using the above vehicle classes and models studied for the Territories, overall ownership costs as well as vehicle maintenance costs are higher than for the Provinces. 

6.2     Other operating cost adjustments for the Territories

The methodology to calculate fixed and variable expenses for the Territories remained the same as for the Provinces. However, by virtue of using different vehicle classes, total costs are higher than for the Provinces.

The Territories usually display more elevated costs for fuel due to the higher costs of transportation and servicing. At the same time, by adding pick-up trucks and eliminating the more fuel-efficient compact and mid-size classes, overall fuel consumption is also higher than for the ten Provinces.

In terms of vehicle maintenance, adjustments were also made to reflect the extra equipment necessary for safe driving in the North, as well as use of special off-road or winter tires. The extra equipment that most acutely influences total maintenance costs for the Territories includes, but is not limited to, winter preparation packages, specialized tires, off-road survival kits and specialized signalling and communication devices, use of special engine oils and other freeze resistant liquids. For this reason, preventative maintenance and repair costs were increased by 25% and tire costs by 50% for the Territories.

7       Operating Cost Summary and Recommendations

We recommend continuing the practice of reimbursing government-requested personal vehicle use on the basis of both fixed and variable expenses, referred to as the Travel Rate. At the same time we recommend that reimbursement of employee-requested personal vehicle use be based only on variable expenses, referred to as the Commuting Rate. This is consistent with current practice. All rates have been rounded up to the nearest 0.5 cents.

The following table provides calculated evaluations for both the Travel and Commuting Rates, as well as rates determined in the previous Annual Study and the latest Fuel Update, for comparison. 

2017 Reimbursement Schedule (in dollars per kilometre)

Province/Territory

Current Annual
Travel Rate

1 Oct 2016
Fuel Update
Travel Rate

1 Jan 2016
Annual Report
Travel Rate

Current
Annual
Commuting
Rate

1 Oct 2016
Fuel Update
Commuting
Rate

1 Jan 2016
Annual Report
Commuting
Rate

Alberta

$0.445

$0.435

$0.440

$0.170

$0.175

$0.180

British Columbia

$0.495

$0.475

$0.475

$0.205

$0.205

$0.205

Manitoba

$0.470

$0.470

$0.470

$0.180

$0.185

$0.185

New Brunswick

$0.500

$0.485

$0.480

$0.190

$0.185

$0.185

Newfoundland
and Labrador

$0.555

$0.530

$0.515

$0.215

$0.210

$0.190

Nova Scotia

$0.500

$0.485

$0.485

$0.190

$0.185

$0.185

Ontario

$0.545

$0.540

$0.540

$0.185

$0.185

$0.185

Prince Edward Island

$0.490

$0.475

$0.470

$0.190

$0.185

$0.185

Quebec

$0.500

$0.495

$0.500

$0.205

$0.195

$0.200

Saskatchewan

$0.460

$0.455

$0.460

$0.180

$0.180

$0.185

Northwest Territories

$0.595

$0.580

$0.585

$0.255

$0.265

$0.265

Nunavut

$0.590

$0.575

$0.590

$0.250

$0.255

$0.270

Yukon

$0.605

$0.590

$0.595

$0.255

$0.260

$0.265

Note: All figures were rounded up to the nearest half-cent.

The current Travel Rates (for publication on January 1st 2017) show minimal to moderate variations versus the Travel Rates from the previous Fuel Update (for publication on October 1st 2016), ranging from no increase in Manitoba to an increase of 2.5 cents per kilometre in Newfoundland and Labrador.

Year-over-year, as compared to the previous year Annual Report, Travel Rates varied between no increase to an increase of the 4.0 cents per kilometre, while the Commuting Rates varied between a decrease of 2.0 cents per kilometre to an increase of 2.5 cents per kilometre across Canada.

On the other hand, as compared to the rates published in the previous Fuel Update (for publication on October 1st 2016), Commuting rates have changed slightly, having ranged between an increase of 1.0 cent per kilometre in Quebec, to a decrease of 1.0 cents per kilometre in the Northwest Territories.

In conclusion, Travel Rates have increased slightly across Canada. The Commuting Rates stayed relatively constant across the country. The main factors that led to a minimal increase in vehicle-related costs are higher ownership costs, a stronger-than-average vehicle resale market and slightly higher insurance premiums. Costs of fuel have been lower than average across the country, thus having a tempering effect. The registration and vehicle maintenance components only had a minimal effect on reimbursement rates. It is also worth mentioning that a hike in the sales tax (HST) for three out of the four Atlantic Provinces had a direct effect on the rates for the respective Provinces. All future changes in fuel prices will be reflected in the three subsequent Fuel Updates for 2017.