Reimbursement for Business Use of Personal Vehicles Fuel Price Update

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 2011 based on a comprehensive review of costs as presented in the "Reimbursement for Business Use of Personal Vehicles Model Year 2011 Update" dated December 2010. 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 2010 and January and February 2011. For reference, fuel pricing from the 2011 Annual Update is also shown.

Fuel prices since the 2011 Annual Update last December have shown a modest increase, which ranges from $0.051 to $0.098 per litre. The higher pump prices are primarily a reflection of the recent upturn in the global economic recovery and uncertainty of OPEC's response, China's efforts to address their growth and inflation, and instability in Egypt and Libya and concerns that unrest could spread to major oil supplying countries. Crude oil prices were around US$98/bbl in mid February. The average retail price for regular gasoline during the last week of February 2011 was $1.148 per litre.

Province/Territory Current Fuel Price
(per litre)
2011 Annual
Update Price
Pump Price
Alberta $1.010 $0.937 $0.073
British Columbia  $1.157  $1.106 $0.051
Manitoba  $1.046  $0.971 $0.075
New Brunswick $1.098  $1.001 $0.097
Newfoundland $1.208  $1.114 $0.094
Northwest/Nunavut $1.246  $1.171 $0.075
Nova Scotia $1.167  $1.072 $0.095
Ontario $1.127  $1.039 $0.088
Prince Edward Is. $1.091  $1.009 $0.082
Quebec $1.177  $1.079 $0.098
Saskatchewan $1.087  $1.016 $0.071
Yukon $1.171  $1.143 $0.028

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 $0.082 per litre higher on average than those for the 2011 Annual Update, which resulted in an increase in the recommended reimbursement rates for all locations.

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 increased across the board from the 2011 Annual Update, with adjustments indicated in all locations. The following table shows our recommended reimbursement schedule based on current fuel prices, along with those for the 2011 Annual Update.

Location Commuting Travel 2011 Annual Update
Commuting / Travel
Alberta $0.140 $0.520 $0.135 / $0.510
British Columbia $0.160 $0.510 $0.155 / $0.505
Manitoba $0.140 $0.480 $0.135 / $0.470
New Brunswick $0.150 $0.505 $0.140 / $0.495
Newfoundland $0.170 $0.540 $0.160 / $0.530
Northwest $0.260 $0.585 $0.245 / $0.575
Nova Scotia $0.165 $0.520 $0.155 / $0.510
Nunavut $0.260 $0.585 $0.245 / $0.575
Ontario $0.160 $0.555 $0.150 / $0.545
Prince Edward Island $0.150 $0.510 $0.145 / $0.500
Quebec $0.165 $0.580 $0.160 / $0.570
Saskatchewan $0.150 $0.460 $0.140 / $0.455
Yukon $0.250 $0.610 $0.245 / $0.605

For both the Commuting and Travel reimbursement rates, the changes from the 2011 Annual Update (reported in December 2010) were all increases of $0.005 or $0.010 per kilometer in the provinces. The Commuting rate increased by $0.015 in Northwest/Nunavut and by $0.005 in the Yukon Territory. The Travel rates for Northwest/Nunavut increased by $0.010 and by $0.005 in the Yukon Territory. 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.