As global conflicts continue, diesel prices are sharply rising, affecting the cost of transporting food and goods across Canada. According to experts, filling up trucks that transport goods and products throughout Canada has reached unprecedented high costs, signaling potential impacts on Canadians in the near future.
“It’s a very dire situation,” said Tej Dulat, Government and Public Affairs Director of the Canadian Truck Operators Association, in an interview with CBC News.
Dulat emphasized that commercial transport trucks consume hundreds of liters of diesel every week, making fuel one of the major costs for trucking companies.
He noted that while the transportation industry can usually absorb short-term fuel price hikes, the ongoing tensions since Russia invaded Ukraine in 2022 have squeezed profit margins. Now, diesel prices are even higher.
“In the end, businesses have to pass on these costs to consumers,” said Dulat. “You’ll start to see these costs reflected in food prices.”
As of Saturday, September 12, the average diesel price in Canada was $2.62 per liter, higher than the previous week’s peak of $2.52 per liter. Prices had briefly dropped before.
Data from Natural Resources Canada shows that the current diesel price is over $1 higher than the same period last year and surpasses the highest weekly average price of 2022, which was $2.30 per liter.
Some regions are facing even more severe situations. In Vancouver, the diesel price hit $2.92 per liter on Saturday. In Alberta, some farmers stated that the current diesel price is about 80 cents higher per liter than last year, eroding their profit margins.
In the United States, diesel prices also hit a record high on Friday, exceeding $6 per gallon, causing market fluctuations nationwide.
In recent weeks, there has been significant concern in Canadian society about the potential impact of tariffs on Canadian product prices. However, experts suggest that the recent substantial increase in oil prices indicates that the current geopolitical conflicts may have a more noticeable impact on prices than tariffs.
Last week, Bank of Canada Governor Tiff Macklem stated that while tariffs may severely impact certain industries, they are not expected to have a significant effect on Canada’s overall economic activity level.
He pointed out that the ongoing conflicts between the US and Iran, keeping oil prices elevated, may lead to cost transmission effects in the short term, spreading the impact of high oil prices to other goods.
“The longer oil prices and refined product prices remain high, the greater the risk of sustained inflationary pressures,” he said.
Experts point out another pressing issue: extreme diesel supply shortages.
The International Energy Agency (IEA) report released on Friday, September 11, indicated that as of August, the net export of diesel and gasoline products in the Persian Gulf region had dropped to just over a quarter of pre-war levels.
Meanwhile, other geopolitical factors are further constraining global diesel supply.
One of the world’s largest oil-producing countries, Russia, recently extended its diesel export ban to September 30. Previously, attacks by Ukraine on several Russian refineries had disrupted local fuel supplies.
Canada’s largest refinery, the Irving Refinery in New Brunswick, is also shut down for maintenance until November, further limiting diesel supply.
The federal government of Canada announced last week an extension of the temporary suspension of the federal fuel consumption tax until January 2027. This measure includes a 4-cent federal fuel tax per liter of diesel, originally set to expire on September 7.
However, experts believe this measure is still insufficient to offset rising costs. Patrick De Haan, head of oil analysis company GasBuddy, mentioned that if the issues are not resolved in the coming months, high diesel prices could become an “invisible killer of the North American economy.”
Energy analyst Dan McTeague indicated that diesel prices typically rise further during winter. This indicates that Canada may be facing a “very, very expensive winter,” affecting not only the trucking industry but also transportation sectors like aviation, railways, and ordinary consumers.
Evan Fraser of the Arrell Food Institute at the University of Guelph expressed concern that rising diesel prices will impact every aspect of the food supply chain, including transportation, storage, and production.
Normally, there is a time lag between diesel price increases and food prices on supermarket shelves, with the cost impact gradually spreading. However, Fraser believes this time may be different due to multiple factors simultaneously increasing food costs, such as this year’s heatwaves affecting crop yields. He described it as a “perfect storm” causing sustained upward pressure on food prices.
Fraser is worried that Canada and the global community may be heading towards a “new normal,” where food prices remain at higher levels for the next decade.
The fundamental conditions that global food production and trade have relied on, including cheap and stable energy prices, suitable agricultural production environments, and relatively stable geopolitical environments for easy trade, are no longer reliable.
“In the short term, low-income Canadians will face a very challenging situation,” Fraser said.