Canadian Diesel Prices Surge to $2.62/Litre, Raising Concerns Over Grocery Costs
Diesel prices in Canada have reached a new high of $2.62 per litre, driven by geopolitical conflicts and supply constraints. Experts warn that these elevated fuel costs may lead to increased grocery prices for Canadians.
As of Saturday, diesel prices across Canada sat at $2.62 per litre, surpassing last week's high of $2.52. This current price is more than a dollar higher than it was during the same time last year. In Vancouver, the reported diesel price on Saturday was even higher at $2.92 per litre.
The surge in fuel costs is being driven by multiple factors, including the ongoing U.S.-Israel war with Iran and supply constraints from Russia and local refinery maintenance. Bank of Canada Governor Tiff Macklem stated that while tariffs may impact some sectors, the conflict involving Iran is the main driver keeping gas prices high and poses a risk of spillover into persistent inflation.
According to the International Energy Agency, net exports of diesel/gasoil from the Persian Gulf region dropped to just over a quarter of pre-war levels as of August. Additionally, Russia recently extended a ban on diesel exports after Ukraine damaged several oil refineries. Domestically, Canada's largest refinery, the Irving Refinery in New Brunswick, is undergoing maintenance until November, which affects its diesel production capabilities.
In the United States, the average price of diesel hit a record high of more than $6 US per gallon on Friday.
Evan Fraser from the University of Guelph's Arrell Food Institute warned that rising diesel prices impact every part of the food supply chain, including shipping, storing, and producing. He noted that these high fuel costs will likely lead to increased grocery prices for Canadians, potentially creating a 'new normal' of elevated food costs due to persistent geopolitical instability and energy price inflation.
To help mitigate the burden, the federal government announced that the temporary suspension of the federal fuel excise tax, including the four-cent-per-litre tax on diesel, would be extended through January 2027.