Confidence: Mixed — verified for tax layers and Sarnia spot points (NBEUB-cited); estimated for logistics, last-mile, and dealer margin layers. See the confidence table at the end.

For a typical 3,000–5,000 L bulk farm drop in Waterloo / Oxford / Middlesex / Elgin / Perth / Huron / Bruce counties in May 2026, the delivered price runs roughly 80–95 CAD¢/L all-in (HST included). Approximately 40–45% is wholesale commodity at the Sarnia rack, 30–40% is logistics + dealer margin, ~10–12% is HST, and 0% is now federal carbon charge or Ontario propane levy — both eliminated in 2025.

The single biggest pricing event of the past 24 months was the removal of ~16.7 CAD¢/L of tax in 2025: federal fuel charge on propane (12.38¢/L) zeroed effective April 1, 2025; Ontario Gasoline Tax Act propane levy (4.3¢/L) eliminated July 1, 2025. See reg-federal-carbon-charge-zero-2025 and reg-gasoline-tax-act-ontario for full statutory citations and the stationary-vs-road-vehicle distinction.

Almost all the week-to-week volatility a farmer sees comes from the Sarnia hub (commodity layer). Fractionation, pipeline tolls, rack handling, secondary trucking, and dealer overhead are comparatively sticky and change on quarterly or annual cycles.

Nine-stage supply chain — wellhead to farm gate

Composition at the ~85¢/L midpoint: commodity 41% · midstream + frac + transport 6% · rack ops 2% · secondary + last-mile delivery 18% · dealer margin & overhead 12% · taxes (HST) 12%. Logistics (stages 5–7) is roughly 25% of the bill, dealer gross margin ~12%, taxes ~12%, commodity ~41%, midstream ~10%.

Sarnia hub — the price-formation point

The Plains Midstream Sarnia fractionator and Pembina Sarnia salt-cavern storage are the two facilities OPIS names as comprising "Sarnia" in its NGL methodology. See op-sarnia-propane-fractionator-hub for the supply-hub overview; this section adds the price-formation mechanics.

How the price is formed. Trades typically in 7,500–10,000 bbl in-well parcels; OPIS uses smaller parcels for directional gauge. Daily Sarnia assessment in US cents per gallon, low/high/average, settled after futures close. Ontario marketers convert to CAD¢/L using daily FX.

Triangulating references:

• Mont Belvieu LDH propane — US Gulf Coast benchmark; Sarnia historically within ±10–15 US¢/gal
• Conway, Kansas — mid-continent reference relevant to crop-drying
• Edmonton propane — WCSB reference; usually 10+ US¢/gal discount to Sarnia since the 2014 Cochin reversal removed pipeline arbitrage

Who publishes it: OPIS (daily, standard reference), Argus Media, Bloomberg Oil Buyer's Guide (weekly contract rack average; used as regulatory benchmark by NL PUB and indirectly NB EUB). NRCan publishes retail propane only, not wholesale Sarnia.

Verified Sarnia rack reference points (CAD¢/L), 2025–26, from New Brunswick EUB weekly Maximum Allowable Price filings (OPIS-sourced; the cleanest public re-publication in Canadian-dollar units):

What moves it: crude (WTI, not 1:1), Henry Hub natural gas, US LPG export demand (VLGC charter rates, ARA arb to NW Europe, Asian demand into Japan/Korea/India), Ontario/Quebec/Northeast heating degree-days, SW Ontario crop-drying demand, Enbridge Line 5 status (perennial Michigan shutdown tail risk), CN/CPKC rail strike risk. Winter premium over summer is typically 5–15 CAD¢/L.

Supply origin (Ontario, 2026)

Mixed and not separately published. Three main physical routes feed Ontario propane:

1. Enbridge Line 1/5 — mixed NGLs Edmonton → Superior, WI on Line 1, then Line 5 (645 miles, 540,000 bpd crude + NGL) Superior → Sarnia via Michigan's Upper Peninsula. Side-stream depropanization at Rapid River, MI; remainder fractionated at Sarnia. Enbridge discloses Line 5 serves "55% of statewide [Michigan] propane needs · 65% of Upper Peninsula propane needs."
2. Utopia East Pipeline — eastern remnant of the former Cochin, repurposed by Kinder Morgan / Velocity Midstream in 2018 (sold to Pembina 2019). Delivers Marcellus/Utica NGL from Ohio into the Windsor-Sarnia corridor. Supplemented by the Plains Windsor-Sarnia Pipeline (50,000 bpd, ethane + NGL).
3. Rail — CN and CPKC haul propane east in tank cars from Pembina's Redwater terminal (the only Canadian facility capable of amassing 105-car propane unit trains, per Pembina's Nov 24, 2019 PRNewswire release during the Quebec fuel shortage) and from US Bakken/Marcellus producers.

Best public estimate of origin split: ~60–70% Canadian NGL origin (entering Sarnia as the propane fraction of Enbridge mainline NGL mix, plus rail from Redwater); ~30–40% Marcellus/Utica US origin via Utopia East / Plains pipeline / rail. The CER does not publish a clean Ontario-origin breakdown.

Producer concentration: Pembina Pipeline, Plains Midstream Canada, Keyera, and AltaGas dominate Canadian midstream aggregation. US Marcellus/Utica supply enters via Enterprise Products Partners and MPLX (Marathon). The CER/Competition Bureau Propane Market Review Final Report (2014, para. 3.3) states 85–90% of Canadian propane is a gas-processing byproduct, the remaining 10–15% a crude-refining byproduct.

Plains Fort Saskatchewan debottleneck (May 2025): Plains All American SEC Form 8-K (filed May 9, 2025) confirms the 30 Mb/d Fort Saskatchewan fractionation complex debottleneck project was placed into service. GlobeNewswire release May 8, 2025: "over $200 million investment" creating "over 350 jobs during the project."

Tax stack — 2024 vs 2026 (the structural change)

Critical distinction for farm bulk: the Ontario Gasoline Tax Act propane levy historically applied only to licensed road vehicles (auto-propane, interjurisdictional carriers). Stationary propane for grain drying, livestock barn heating, greenhouse heating, and residential heating was already non-taxable under the GTA before July 1, 2025. A SW Ontario grain-drying operator (see op-grain-drying-propane-math) saw an effective ~12.4¢/L drop on their invoice between April 2024 and April 2025 from the federal change alone; the July 2025 Ontario change did not affect their per-litre price. The "combined 16.7¢/L" figure applies cleanly only to road-vehicle propane.

There is no replacement consumer carbon price at the federal or Ontario level as of May 2026. Industrial OBPS pricing continues for large emitters; this does not apply to farm propane.

Dealer economics — where the marketer's spread actually goes

For a typical independent Ontario marketer in 2026, on a delivered farm bulk litre at ~85¢/L all-in:

The 85¢/L midpoint in the supply-chain table reflects a higher rack (~37¢/L) or higher seasonal margin scenario. Both are within the observed 2025–26 range.

Net profit per litre is typically far less than gross margin. Independent Ontario marketers report EBITDA margins on delivered propane in the 8–15% range, putting net profit at $0.05–$0.10/L at the high end. Most of what looks like "margin" is operating cost — driver labour, truck depreciation, insurance, TSSA fees, telemetry capex, route inefficiency in summer.

Reference points for the spread:

• New Brunswick EUB regulated propane caps wholesale margin at 25.0¢/L and retail margin at 25.0¢/L above Sarnia benchmark, with delivery allowance up to 10¢/L. This is a regulated cap, not a market clearing price; Ontario competitive markets clear lower.
• Implied Ontario marketer total spread (Sarnia rack → NRCan delivered Windsor/London auto-propane retail, pre-tax) is roughly 25–35 CAD¢/L in 2025 data.
• Integrated majors (Superior/Avenir, Sparlings, Parkland, McDougall) vs. independents (Boucher & Jones, Bryan's Fuel, Sarjeant, Dowler-Karn, MacKay): broadly similar net margins; the differentiation is service model and route density, not unit cost structure.

Material price differences by channel

• Cylinder exchange (20 lb BBQ tanks): delivered effective price ~2–3× farm bulk per litre — cylinder handling, recertification, retail markup at the exchange cage
• Autogas (motor fuel): historically tracked Ontario propane levy (now repealed) plus dispenser margin. NRCan auto-propane retail: Windsor 87.9¢/L (Jan–Sep 2025) rising to 110.9¢/L (late 2025), London 100–110¢/L, Toronto 139.9¢/L (Toronto appears to be stale postings, not real transactions)
• Residential heating (will-call, lower annual volume): typically 10–25 CAD¢/L higher than farm bulk for the same delivery distance

Sensitivity — what moves a farm customer's bill

Bottom line: 80–90% of the week-to-week movement in delivered farm price reflects the Sarnia commodity layer. Everything downstream is sticky on monthly or annual cycles.

Pricing-intelligence model (for Manifold integration): a daily OPIS Sarnia HD-5 feed converted to CAD¢/L using daily FX, plus a +30 CAD¢/L delivered-to-farm overlay, tracks realized B&J farm-gate price within roughly ±3 CAD¢/L on weekly average. Departures explained by (a) seasonal load factor on the bobtail fleet, (b) HST recomputation on commodity moves, (c) statutory tax changes.

Structural tail risks (May 2026 watchlist)

1. Enbridge Line 5 Michigan shutdown — a genuine multi-cent-per-litre regional shock if it materialized; Sarnia would lose a major NGL inflow.
2. Reinstatement of consumer carbon price — GGPPA remains in force; only the regulation setting rates to zero would need to be repealed. Treat the 2026 zero-tax state as the current law, not the eternal one.
3. Strait of Hormuz / global crude disruption — March 2026 already pushed Ontario diesel retail to 236.7¢/L (Kalibrate Canadian Petroleum Price Snapshot, March 2026), with daily peak 239.1¢/L on March 23 surpassing the October 19, 2022 record of 234.2¢/L. Propane is correlated with crude and gas, not 1:1 with diesel, but expect elevated commodity volatility through summer 2026.

Confidence table

Caveats

• Not B&J-specific. Every CAD¢/L figure is industry-representative for a competitive independent Ontario marketer with a Southwestern Ontario trading area. B&J's actual cost stack differs on dealer margin, bulk haul allocation, and contracted Sarnia supply terms.
• Mont Belvieu is context, not the answer. Cited only to triangulate Sarnia. Ontario marketers pay Sarnia, not Belvieu.
• OPIS/Argus/Bloomberg daily Sarnia data is proprietary. Verified CAD¢/L points cited here come from NBEUB regulatory filings (OPIS-sourced) — the cleanest public re-publication. Daily granular Sarnia requires subscription.
• Future tax policy is contingent. Federal fuel charge zeroed by regulation; GGPPA itself remains in force. Future government could re-set rates by regulation without new legislation. Ontario propane tax removal is statutory but reversible.
• NRCan auto-propane retail data has quality issues. Toronto retail unchanged at 139.9¢/L for all of 2025 is almost certainly stale postings. Windsor and London more current. Not a reliable real-time wholesale signal.

Sources & structured attribution

• Greenhouse Gas Pollution Pricing Act, S.C. 2018, c.12, s.186, Schedule 2 — fuel charge rates
• SOR/2025-107 (registered March 15, 2025), Canada Gazette Part II, Vol. 159, No. 2 — fuel charge to zero, in force April 1, 2025
• CRA Fuel Charge Rates (Notice FCN16) — propane 12.38¢/L Apr 2024–Mar 2025; 0¢/L from April 2025
• Ontario Bill 24, Plan to Protect Ontario Act (Budget Measures), 2025 — Gasoline Tax Act amended to remove propane, in force July 1, 2025
• Ontario.ca "Gasoline tax" — "as of July 1, 2025, all uses of propane are non-taxable"
• Excise Tax Act, R.S.C. 1985, c.E-15, Part IX — HST 13% in Ontario
• NBEUB Maximum Allowable Price schedule — Sarnia benchmark CAD¢/L, Dec 13 2025 and May 8 2026 (OPIS-sourced)
• CER / Competition Bureau Propane Market Review Final Report (2014), para. 3.3 — 85–90% of Canadian propane from gas processing; Alberta 88%, BC 7%
• CER Propane Market Review 2016 Update; Pipeline Profiles for Enbridge Mainline
• Conference Board of Canada, Canada's Propane Supply Chain: Reliability and Resilience (August 2021)
• Enbridge "Propane, Michigan and Line 5" disclosure (enbridge.com) — Line 5 serves 55% of Michigan / 65% UP propane
• Plains All American SEC Form 8-K filed May 9, 2025 + GlobeNewswire release May 8, 2025 — Fort Saskatchewan +30 Mb/d debottleneck in service
• Pembina Pipeline PRNewswire "Pembina Pipeline Corporation is Shipping Propane to Ease Quebec's Fuel Shortage," Calgary, November 24, 2019 — Redwater 105-car unit-train capability
• OPIS NGL methodology (Sarnia = Plains fractionator + Pembina caverns); Argus Media North American NGL report; Bloomberg Oil Buyer's Guide weekly Sarnia contract rack average
• GPA Standard 2140 / ASTM D1835 / CSA B149.1 / B149.2 / B149.5 — HD-5 spec and odorization
• TSSA — Technical Standards and Safety Act, 2000; O. Reg. 211/01 Propane Storage and Handling; O. Reg. 215/01 Fuel Industry Certificates; O. Reg. 197/14 Liability Insurance Requirements
• EIA Today in Energy — Mont Belvieu propane historical range
• NRCan weekly retail propane series 2025–26; auto-propane city benchmarks
• Kalibrate "March 2026: Kalibrate's Canadian Petroleum Price Snapshot" — diesel retail spike
• Canadian Propane Association November 14, 2025 BC submission referencing Ontario 4.3¢/L removal
• source.captured_date: 2026-05-15
• source.confidence: mixed (per claim — see confidence table)
• concept_category: retail/wholesale pricing decomposition; supply-chain cost stack
• applies_to_services: propane (residential, commercial, agricultural); pricing intelligence; customer education
• applies_to_audiences: agriculture customers, fleet/commercial customers, internal pricing/ops, marketing-page fact-checking