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Ontario on-road clear-diesel retail price — layer decomposition (as of May 13, 2026)

op-clear-diesel-price-decomposition
operational-concept service-catalog
audiences: bj-staff, bj-customer, fleet-commercial, internal-team
topics: pricing, clear-diesel, ontario-fuel-tax, federal-excise, carbon-charge
updated: 2026-06-13

The Ontario on-road clear-diesel pump price decomposes into six layers, of which four are fixed statutory rates and two are market-determined.

# Layer Rate Authority Effective Type
1 WTI / wholesale crude reference market n/a n/a market — not statutory
2 Rack-to-pump margin (refining + marketing + transport) market n/a n/a market — not statutory
3 Federal excise tax on diesel 0 ¢/L (suspension period); otherwise 4 ¢/L Excise Tax Act; Department of Finance Canada backgrounder, April 14, 2026 Suspension Apr 20 – Sep 7, 2026; reverts to 4 ¢/L thereafter statutory
4 Federal carbon fuel charge on diesel (light fuel oil under GGPPA Schedule 2) 0 ¢/L Greenhouse Gas Pollution Pricing Act, Schedule 2, as amended by SOR/2025-107 (P.C. 2025-446, registered March 15, 2025) April 1, 2025 (permanent for consumer charge) statutory
5 Ontario fuel tax (diesel) 9 ¢/L Fuel Tax Act, R.S.O. 1990, c. F.35, as amended by legislation introduced in the 2025 Ontario Budget Permanent from July 1, 2025 (previously temporary July 1, 2022 – June 30, 2025) statutory
6 Harmonized Sales Tax (HST) — Ontario portion 8% + federal GST 5% = 13% 13% Excise Tax Act (GST/HST) Long-standing statutory (ad valorem)

Clarification on the actual rack reference (added 2026-05-16)

Layer 1 in the table above lists WTI for shorthand, but the Ontario diesel rack does not track WTI directly. It tracks NY Harbor ULSD futures (NYMEX HO) plus a Toronto basis, per Ontario Ministry of Energy methodology ("the wholesale price of gasoline and diesel in Ontario is strongly influenced by North American wholesale markets at certain locations - called benchmarks - such as the New York Harbor for Toronto prices and Edmonton for Thunder Bay prices"). WTI is upstream crude; NYH ULSD is the actual refined-product reference. See reference-rack-pricing-data-providers-canada for the full publisher list, posted-vs-net-rack-vs-DTW mechanics, and the Ontario Open Data daily CSV source.

Federal excise suspension

Department of Finance Canada backgrounder, April 14, 2026 (https://canada.ca/en/department-finance/news/2026/04/temporarily-suspending-the-federal-fuel-excise-tax.html): "The federal excise tax currently applies at a rate of … 4 cents per litre on diesel fuel … As of April 20, 2026, federal excise tax rates … would be reduced to 0 cents per litre … until and including September 7, 2026. It is estimated this will provide over $2.4 billion in total tax relief." Confirmed in Natural Resources Canada "Fuel Consumption Levies in Canada" (last updated December 1, 2025).

HST treatment

Per Natural Resources Canada: "The federal GST/HST is charged on crude oil, refining and marketing costs and margins, the federal excise tax, applicable federal and provincial carbon levies, and provincial road taxes." HST is therefore applied to the grossed-up price including the other statutory layers; it is not applied to a subtotal that excludes them.

Worked illustration (May 2026, illustrative wholesale baseline ~95 ¢/L pre-tax; not a quote)

Pre-tax baseline ~95 ¢/L → + federal excise 0 ¢/L (in suspension) → + federal carbon 0 ¢/L → + Ontario fuel tax 9 ¢/L → subtotal ~104 ¢/L → × 1.13 HST = ~117.5 ¢/L pump price.

After September 7, 2026, federal excise of 4 ¢/L is restored, pushing the pump price up by approximately 4.5 ¢/L (4 ¢/L excise × 1.13 HST). This is the forward-dated number to carry as a footnote on the clear-diesel page; copy should not bake in 0¢ excise as permanent. See reg-federal-excise-suspension-2026 for the inventory and import treatment during the window (CRA ETSL82; CBSA 26-11).

Federal carbon charge

SOR/2025-107, registered March 15, 2025, set the fuel-charge rates for all 21 listed fuels and combustible waste in Schedule 2 of the GGPPA to zero, effective April 1, 2025. Reporting/registration obligations cease after March 2025 for non-registered persons. CRA Notice FCN16 confirms removal of the fuel charge. The KB's existing entry reg-federal-carbon-charge-zero-2025 is correct.

Ontario fuel tax

2025 Ontario Budget, Chapter 1B (https://budget.ontario.ca/2025/chapter-1b-costs.html): "The government is introducing legislation to amend the Gasoline Tax Act and the Fuel Tax Act to permanently maintain the provincial tax rates on gasoline and fuel at 9 cents per litre. This change would take effect on July 1, 2025." Reconfirmed in the 2026 Ontario Budget (budget.ontario.ca/2026/chapter-1b-costs.html).

Sources & structured attribution

Confidence: verified (primary source confirmed 2026-05-13; updated 2026-05-16 with rack-reference clarification and forward step-up figure).

Frequently asked questions

What are the layers in an Ontario on-road clear-diesel pump price?

Six layers: (1) WTI / wholesale crude reference (market), (2) rack-to-pump margin covering refining, marketing, and transport (market), (3) federal excise tax — currently 0 ¢/L during the April 20–September 7, 2026 suspension, otherwise 4 ¢/L, (4) federal carbon fuel charge at 0 ¢/L under SOR/2025-107 effective April 1, 2025, (5) Ontario fuel tax at 9 ¢/L permanent from July 1, 2025, and (6) Harmonized Sales Tax at 13% applied to the full pre-HST total. Four layers are statutory; two are market-determined.

Why is the federal excise tax showing 0 ¢/L on diesel in 2026?

Federal excise on gasoline (normally 10 ¢/L) and diesel (normally 4 ¢/L) is temporarily suspended from April 20, 2026 to September 7, 2026 under amendments to the Excise Tax Act announced April 14, 2026. Normal rates resume September 8, 2026. Pump pricing during the window reflects 0 ¢/L federal excise; the suspension is time-bounded and should not be baked into any forward price modelling.

Is HST charged on top of fuel taxes in Ontario?

Yes. The 13% Harmonized Sales Tax (5% federal GST + 8% Ontario portion) applies to the full pre-HST price — including the wholesale layer, rack-to-pump margin, federal excise, federal carbon charge (currently zero), and Ontario fuel tax. The HST is ad valorem, so it scales with the underlying price; the other statutory layers are flat rates.

Metadata

{
  "faq": [
    {
      "a": "Six layers: (1) WTI / wholesale crude reference (market), (2) rack-to-pump margin covering refining, marketing, and transport (market), (3) federal excise tax — currently 0 ¢/L during the April 20–September 7, 2026 suspension, otherwise 4 ¢/L, (4) federal carbon fuel charge at 0 ¢/L under SOR/2025-107 effective April 1, 2025, (5) Ontario fuel tax at 9 ¢/L permanent from July 1, 2025, and (6) Harmonized Sales Tax at 13% applied to the full pre-HST total. Four layers are statutory; two are market-determined.",
      "q": "What are the layers in an Ontario on-road clear-diesel pump price?"
    },
    {
      "a": "Federal excise on gasoline (normally 10 ¢/L) and diesel (normally 4 ¢/L) is temporarily suspended from April 20, 2026 to September 7, 2026 under amendments to the *Excise Tax Act* announced April 14, 2026. Normal rates resume September 8, 2026. Pump pricing during the window reflects 0 ¢/L federal excise; the suspension is time-bounded and should not be baked into any forward price modelling.",
      "q": "Why is the federal excise tax showing 0 ¢/L on diesel in 2026?"
    },
    {
      "a": "Yes. The 13% Harmonized Sales Tax (5% federal GST + 8% Ontario portion) applies to the full pre-HST price — including the wholesale layer, rack-to-pump margin, federal excise, federal carbon charge (currently zero), and Ontario fuel tax. The HST is ad valorem, so it scales with the underlying price; the other statutory layers are flat rates.",
      "q": "Is HST charged on top of fuel taxes in Ontario?"
    }
  ],
  "confidence": "verified",
  "description": "Ontario on-road clear-diesel pump price decomposition: WTI, rack-to-pump margin, federal excise (suspended), carbon charge (zero), Ontario tax, HST."
}

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