The conflict between the U.S. and Israel against Iran is leading to a significant increase in diesel prices throughout Canada, surging by almost 30% since the commencement of the war. This week, the average retail cost of diesel has reached $2.19 per litre, marking the highest price point since 2022 when Russia invaded Ukraine. In comparison, regular gasoline is currently priced at an average of $1.75 per litre at gas stations, according to Kalibrate Canada, a firm specializing in fuel data and analytics.
The sharp rise in diesel prices is anticipated to result in elevated shipping expenses as diesel is crucial for the transportation industry, powering trucks, trains, and barges. Andrew Lipow, president of Lipow Oil Associates, emphasized the significance of monitoring diesel costs as they directly impact the delivery of consumer goods and services.
Various sectors such as farmers, trucking companies, and transit groups in Canada are already feeling the financial strain caused by the spike in diesel prices. This financial burden is likely to eventually be passed on to consumers, affecting the prices of goods and services.
Trevor Wideman, sales manager at West Coast Transportation in London, Ontario, noted the immediate impact of the rising diesel prices on their operations due to the large fuel tanks of their semi trucks. Wideman highlighted the historical trend of oil and fuel price increases during conflicts in the Middle East.
With the highest average diesel price recorded in Chicoutimi, Quebec, at $2.49 per litre and the lowest in Grande Prairie, Alberta, at $1.85, the disparity in prices across provinces is evident. The ongoing turmoil in the Middle East, notably the closure of the crucial shipping lane, the Strait of Hormuz, has led to a surge in North American oil prices by nearly 50% since the conflict began.
Dennis Darby, chief executive of the Canadian Manufacturers and Exporters, expressed concerns over the escalating fuel costs affecting companies already grappling with tariff challenges. The increased diesel expenses are driving up transportation costs, impacting various industries that rely on diesel for their operations.
Analysts like Lipow warn that the current conflict’s impact on diesel prices is likely to persist, with projections indicating a continuous rise in prices. The disruption in crude oil production and exports from the Middle East, coupled with reduced refinery operating rates in Asia, is exacerbating the supply shortage, contributing to the escalation of diesel prices.
