The surge in diesel prices, attributed to global conflicts, is causing a significant financial strain on trucking companies in Canada. This spike in fuel costs, according to Tej Dulat from the Canadian Truck Operators Association, is a major concern as commercial trucks consume large quantities of fuel weekly, making it one of their most significant expenses. While the industry can handle short-term price increases, the sharp rise in prices since 2022, following the invasion of Ukraine by Russia, has tightened profit margins.
Currently, diesel prices in Canada have reached $2.62 per liter, surpassing last week’s high of $2.52. This is over a dollar higher than the prices a year ago and exceeds the top weekly average of 2022, which stood at $2.30. In Vancouver, prices soared to $2.92 per liter. Meanwhile, in the U.S., the average diesel price hit a record high of over $6 per gallon, causing concerns nationwide.
While much attention has been on tariffs impacting Canadian goods, the recent surge in oil prices due to geopolitical conflicts is having a more immediate effect. Experts suggest that the ongoing U.S.-Israel war with Iran is a key factor contributing to the high gas prices. The shortage of diesel has become a critical issue, with exports dropping significantly from the Persian Gulf region. Additionally, geopolitical tensions, such as Russia’s ban on diesel exports, and the shutdown of Canada’s largest refinery in New Brunswick, are further straining supplies.
To alleviate some of the burden, the federal government extended the suspension of the federal fuel excise tax, including a four-cent per liter tax on diesel, until January 2027. However, industry experts argue that more measures are needed to address the escalating costs. The uncertainty surrounding oil prices and refinery costs poses a risk of persistent inflation if not managed effectively.
Looking ahead, energy analyst Dan McTeague warns that diesel prices typically surge during winter, indicating a potentially expensive season ahead for various sectors, including transportation and consumers. The impact of rising diesel prices extends throughout the food supply chain, affecting shipping, storage, and production. With multiple factors influencing prices, including extreme weather impacting harvests, there are concerns about sustained upward pressure on food prices.
Evan Fraser from the University of Guelph’s Arrell Food Institute warns that the current challenges in the food supply chain may lead to prolonged elevated food prices. The changing dynamics in global food production and trade, coupled with unstable energy prices and geopolitics, could result in a challenging environment for low-income Canadians in the coming years.
