Gas Prices to Remain High in Canada Despite Federal Tax Cut, Warns Expert
Despite the Mark Carney Liberals announcing the scrapping of the federal excise tax on gasoline and diesel fuel starting next week, Canadians can still expect an expensive summer at the pumps, with consequences predicted for every sector of the economy. According to Dan McTeague, president of Canadians for Affordable Energy and a former Liberal MP, this issue is not going away anytime soon.
Impact of Summer Fuel Blends and Middle East Conflicts
Gas stations began using a more expensive summer blend on Wednesday, which typically costs about 10 cents more per litre than the winter blend. This increase would negate the federal excise tax cut of approximately four cents per litre for diesel and 10 cents per litre for gasoline. McTeague noted that gas stations are mandated to use this less volatile summer blend, which replaces butane with cleaner-burning alkylate, every year from April 15 to September 15.
In addition to the seasonal change, the ongoing war in the Middle East continues to disrupt oil supplies. McTeague explained that oil shipments take weeks to arrive by sea, and production facilities in countries like Kuwait, Iraq, the United Arab Emirates, Qatar, and Bahrain have sustained damage that may require years to repair. He described the industry as facing a supply shock, with long-term stability unlikely even if ceasefires or peace deals occur.
Projected Price Trends and Economic Consequences
McTeague predicted that gas prices will remain stuck at about 160 to 180 cents per litre for the next couple of months, potentially longer. In Toronto, prices averaged around 176.9 cents per litre on Wednesday, after peaking at approximately 188.9 cents per litre last week. He forecasted a slight drop to 173.9 cents per litre on Thursday before a weekend rise.
The price of diesel, crucial for the shipping industry, has also surged, hitting record highs of 230 to 240 cents per litre last week in the Greater Toronto Area. This increase is expected to make everyday living more expensive across various sectors.
Government Measures and Criticisms
The Liberals announced the federal excise tax cut on gas, diesel, and aviation fuel this week, set to begin next Monday and end on September 7, aligning closely with the mandated use of summer-blend fuels. However, McTeague argued that more action is needed. He urged the federal government to suspend the Clean Fuel Standard, which he referred to as carbon tax 2.0, and cut the GST from fuel prices to alleviate consumer burdens.
He emphasized that such measures would reduce the perception that the government is profiting from the situation, providing relief to Canadians struggling with high energy costs.
