The ongoing 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 price of diesel has risen to $2.19 per liter, marking the highest price point since 2022 when Russia invaded Ukraine. In contrast, regular gasoline is currently being sold at an average price of $1.75 per liter at gas stations, as reported by Kalibrate Canada, a fuel data and analytics company.
The sharp rise in diesel prices is anticipated to result in elevated shipping expenses, given that diesel is indispensable to the transportation industry for the movement of trucks, trains, and barges. Andrew Lipow, the president of Lipow Oil Associates, highlighted the significance of diesel prices, emphasizing that they directly impact the delivery of consumer goods and services.
Various sectors in Canada, including farmers, trucking firms, and transit organizations, are already feeling the financial strain caused by the spike in diesel prices. This financial burden is likely to be passed on to consumers in the form of increased prices for goods and services. Trevor Wideman, the sales manager at West Coast Transportation in London, Ontario, noted the immediate impact of rising diesel prices on their operations, attributing the price surge to conflicts in the Middle East, which typically lead to instantaneous increases in oil and fuel prices.
Across different regions in Canada, diesel prices vary, with the highest average price observed in Chicoutimi, Quebec, at $2.49 per liter, and the lowest in Grande Prairie, Alberta, at $1.85 per liter. Dennis Darby, the chief executive of the Canadian Manufacturers and Exporters, expressed concerns about the challenges faced by companies dealing with tariffs, as high diesel costs contribute to escalated transportation expenses, affecting various industries.
The ongoing conflict in the Middle East has resulted in the closure of the vital Strait of Hormuz, a key shipping lane for a significant portion of the world’s oil and natural gas. Consequently, North American oil prices have surged by nearly 50% since the conflict’s inception. Lipow underscored that trucking and rail companies are already implementing fuel surcharges, anticipating further impacts on the upcoming agricultural season and subsequent food costs due to increased diesel and fertilizer expenses.
Lipow also indicated that the war’s influence on diesel prices is likely to persist, with projections suggesting a continuation for several more weeks. He emphasized the impact on crude oil production and exports of diesel and jet fuel from the Middle East, exacerbated by Asian refiners reducing their refinery operations due to supply shortages from the region.