Gas prices remain elevated worldwide in the fallout from the Iran war and some temporary relief at the pumps for Canadian consumers is set to end next month when the fuel excise tax pause expires.
It is not yet clear if the federal government plans to extend the pause, but if it does expire next month, then it could wind up costing even more to fill up.
Ottawa launched the temporary measure in April, which removed the federal excise tax from retail gas in Canada until Sept. 7.
“Clearly the removal of the federal excise tax took some of the sting away from these higher prices,” says Dan McTeague, president of Canadians for Affordable Energy.
“The effect has been to, I think, provide at least some mitigating factors in terms of higher prices but it hasn’t been able to hold back the stampede towards higher prices that have cascaded into the rest of the economy.”
The Iran war severely constrained global oil supplies, with the Strait of Hormuz shipping channel in the Persian Gulf region, which normally sees about a fifth of the world’s crude oil and other supplies, essentially closed to cargo traffic for fear of attacks. That’s on top of significant damage done to neighbouring oil, gas, energy and maritime shipping infrastructure and facilities.
The price of U.S. oil, known as West Texas Intermediate, was hovering close to US$82 per barrel as of publication, down from a recent high of about $83 on Wednesday and up from $75 a week earlier.
CAA says the national average for regular grade gasoline in Canada is about CA$1.67 per litre, up from $1.64 a week ago and roughly $1.33 compared to the same time last year.
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Carney extends gas tax holiday to 2027
The prices consumers pay for gasoline and diesel at retail are based on a combination of factors, including global expectations of supply and demand for crude oil, in addition to various taxes and other charges businesses may pass along to consumers.
The federal excise tax is charged on products like gasoline separate from other taxes like HST, which remains in effect.
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McTeague says bringing back the excise tax could mean an increase of roughly 10-11 cents per litre, depending on the region, and that’s separate from other factors that can change the price.
Without geopolitical and broader economic influences on consumer gas prices, there are also more predictable seasonal changes.
Most fuel makers are required to change the composition of their products depending on the time of year, with fall and winter months demanding different performance needs from summer gasoline blends.
Currently, gas stations in Canada are pumping summer-grade gasoline, which is formulated to reduce air pollution in warmer weather, and is comparably more expensive than winter blends.
When temperatures begin to drop, winter-grade gasoline is needed to help vehicle engines start more easily in freezing conditions. This is accomplished by mixing cheaper butane into the fuel and usually results in lower retail prices for gas compared to summer blends.
McTeague says the difference in price can be roughly eight or nine cents per litre, depending on the region.
The transition to winter gas in Canada begins after Sept. 15 — one week after the excise tax is scheduled to return on Sept. 7.
“On Sept. 15th, we return back to the formulation of winter-spec gasoline, and that really means that we might see an uncomfortable increase for one week as a result of the federal government ending the temporary suspension of the excise tax.”
This means, if the excise tax pause expires, then consumers may ride a bit of a gas price roller-coaster for about a week as a potential increase from the return of the excise tax on fuel after Sept. 7 may be somewhat offset by a decrease in price about a week later once winter fuel begins flowing out of retail fuel stations.
But there are more significant global factors which may throw a wrench in things over the long term, and that comes down to ongoing oil supply risks stemming from the Iran war.
Earlier this week, the International Energy Agency (IEA) said it expects global demand for oil to drop over the next few months because higher oil prices will lead consumers and businesses to reduce their consumption of products like gasoline. However, risks to oil supply worldwide remain “substantial,” the IEA says, as it also expects demand to increase again next year.
If the Iran war leads to prolonged oil supply constraints as demand increases, then oil and gas prices could skyrocket once again.
“There is going to in fact be much higher prices for longer, and if we’re uncomfortable with these prices, we’re going to have to get used to them for a very long period of time,” says McTeague.
“We have a critically historically low level of inventory around the world and that’s going to take months, if not years, to reconcile.”
“I think the current government will extend and continue the excise tax suspension, and I think the calls at that point will really depend on where prices are going to go.”
@Had Enough,
I’m not disagreeing, but the way they have made the laws and widespread surveillance, it’s difficult for the public to reject a government’s motion. The Trucker’s-Convoy was a peaceful protest and everyone was on their side until the media told the public to hate them. From there, the government locked peoples’ accounts, spread misinformation and fake pictures claiming they were armed with assault weapons that turned out to not even exist (look up the report regarding Ottawa police, zero charges laid), and police told some convoy members to park their excavators behind a blind hill and within hours the hydraulic lines were cut but only the police knee the machines were parked there. The government has organized against the people.
After 11 years of LPC, is there any surprise mental health issues are up10,000%?
Time for huge revolt. That excise tax drops and we raise hell. Im sick of this Liberal fascist government. Cant vote the b*stards out, then we will burn them out!
No one can tax like a left wing government can tax.
Of course, winter is coming and you have to heat your homes. Elbows up.
Per my previous comment. Harper did propose to phase out fossil fuels by 2100 as part of the G7 pledge.
@ Not Jimbo the dumbass. You are right about the initial submission by Harper in May 2015, but Trudeau happily altered the submission after he won the election in Oct. 2015. All Harper did was set a 30% reduction by 2030 and left it at that.
Here’s what Trudeau altered:
– 40-45% reduction by 2030
– 45-50% reduction by 2035
– Net zero by 2050
So, in reality when you say this isn’t a Liberal policy, you are incorrect because Trudeau signed the Paris Agreement with a much more stringent policy, not Harper who had lost the election by then.
PM@PM.GC.CA is Carneys email address if you want to send a polite email such as this below
Mr Carney
Since the reduction of the fuel tax statistics show that Canadian families are saving an average of $7 per fuel up of their vehicles. That is not a small saving for struggling Canadians.
It is my understanding that you are planning to increase the fuel tax once again on September 8.
Recent polling of Canadians shows a clear majority, 63 per cent, of Canadians oppose the September 8 increase of the fuel tax.
Mr Carney, the reduction of the fuel tax should be made permanent without any increase on September 8.
I thank you for your attention to this matter, which is very important to most Canadians.
Tell Carney not to put the fuel tax back on in September. Send an email and show him just how many pi**ed off Canadians there really are with his taxes that are increasing costs for average families. If we shout loud enough even Carney will listen.
CAA says the national average for regular grade gasoline in Canada is about CA$1.67 per litre, up from $1.64 a week ago and roughly $1.33 compared to the same time last year.
WOW I haven’t seen those prices for a LONG time Vancouver BC is sitting about 1.96 to 2.09 a Litre!! EXPLAIN THAT!!!!!!!! So when you say the national average for regular grade gasoline in “Canada”… WHERE is Canada?!? Cause it ain’t here in Vancouver BC
Ford is calling out the Federal Gov to extend the tax reduction on gas prices, while the Provincial tax of gas is 9¢/litre that has not been reduced at all! Ford, what is up with that??
If the Federal Government increased the excise tax on gasoline to $1.60 a litre that would reduce the Federal deficit to zero and Canada would have a balanced budget.
@Beniamino
Just to let you know, the tax cut is because of Poilievre and the Conservatives. It was their idea.The Liberals are drooling for that tax to be reinstated.
So to sum it up into reality for you
“Poilievre and Conservatives helping Canadians, Carney and Liberals taking from Canadians “
But lying liberals say it doesnt cause significant inflation…
The Liberals will breath a sigh of relief when this tax is back. They can get back to only providing economic relief to those 30% of Canadians they are so target locked on.
Because Carney is Trudeau 2.0 and is carrying on the same W.E.F agendas of destroying Canada while setting himself and his buddies up for a generational wealth capture. Everything is stock market manipulation, vote garnishing and turning Canada into a third world military police state.
Poilievre and the conservatives opposed everything Carney does. The conservatives complained about this temporary tax cut. Don’t they want to help Canadians? Clearly, by their actions, the Carney government does.
What to know? We know that we are being screwed huge. We know that Carney is a coward and once again flew the coop to avoid dealing or being accountable to his word.
We know that the Liberal regime is the scourge we have to deal with. Somehow, someway. Canada is very vulnerable and I dont believe that Pierre Poilievre is the man to lead Canada after we defeat the Liberals. AND DEFINATELY NOT FROM THE NDP!
Oil is cheaper now so stop blaming the conflict. How about the problem is this government won’t allow full utilization of our oil supplies and are bankrupting Canada by trying to implement net zero policies. Net zero has been proven a losing policy yet they continue to use to destroy Canada.
WHY NOT INTRODUCE SOME MORE TAXES ! HELP WITH YOUR RAMMING DOWN OUR THROATS, CLIMATE AGENDA. AFTER ALL , THAT’S WHAT THIS IS ALL ABOUT ! FORCING PEOPLE OUT OF THEIR CARS. KEEP IT F/ G REAL !!!
@dumbass Jumbo
87 countries have carbon pricing policies as per the Paris Accord.
Prime Minister Stephen Harper’s Conservative government submitted Canada’s original target for the Paris Agreement: cutting greenhouse gas emissions by 30% below 2005 levels by 2030.
This isn’t a liberal policy.
Time for you to wake up.
People that are retired can hardly pay all the bills. We don’t even go anywhere because of gas prices. Government could care less.
@simpleton G
Carney removed the commercial carbon tax and rebate, then increased the industrial carbon tax.
Carney scraped the EV Mandate, then replace it with a Zero Tailpipe Emissions Mandate.
You need to wake up.
@JimboJones haha “ consumer carbon tax that never went away”
You just can’t let go of the fact that Carney axed the tax so you pretend he didn’t? It’s gone, let it go.
And the GST/HST will be added to the fuel excise and consumer carbon tax that never went away, it was just added to the industrial carbon tax.
Taxing the middle class into poverty is how the klepto-socialists pay for all the “free” stuff you morons need because they taxed you into poverty.
A bunch of reasons, but the deception is the most brilliant. It has been deceiving the public all along.