The conflict between the U.S. and Israel against Iran is leading to a significant increase in diesel prices throughout Canada, rising by almost 30% since the conflict began. This surge has pushed the average retail price of diesel to $2.19 per litre this week, marking the highest price since 2022, during Russia’s invasion of Ukraine. In comparison, regular gasoline is currently averaging at $1.75 per litre at gas stations, as reported by Kalibrate Canada, a fuel data and analytics company.
The soaring diesel prices are anticipated to result in higher shipping expenses as diesel is crucial for the transportation industry, facilitating the movement of trucks, trains, and barges. Andrew Lipow, the president of Lipow Oil Associates, emphasized the importance of monitoring diesel prices, as they directly impact the delivery of consumer goods and services.
Various sectors, including farmers, trucking companies, and transit groups, are already feeling the financial strain caused by the price surge. Trevor Wideman, the sales manager at West Coast Transportation in London, Ontario, noted the immediate impact on their operations due to the conflict in the Middle East, which historically triggers rapid increases in oil and fuel prices.
Transportation companies typically pass on these increased costs to consumers, affecting prices across various industries. The disparity in diesel prices is evident across different regions, with Chicoutimi, Quebec, recording the highest average diesel price at $2.49 per litre, while Grande Prairie, Alberta, has the lowest at $1.85 per litre.
Dennis Darby, the chief executive of the Canadian Manufacturers and Exporters, highlighted the challenges posed by rising fuel prices, especially for companies already grappling with tariff issues. The closure of the Strait of Hormuz due to the conflict in the Middle East has further exacerbated the situation, affecting a significant portion of global oil and natural gas transportation.
As North American oil prices surge by nearly 50% amid the ongoing conflict, trucking and rail companies are implementing fuel surcharges to cope with the escalating costs. Lipow expressed concerns about the potential prolonged impact of the conflict on diesel prices, attributing the rise to disruptions in crude oil production and exports from the Middle East, along with reduced refinery operations in Asia.
With no immediate resolution in sight for the conflict, Lipow anticipates a continued increase in diesel prices in the coming weeks, impacting various sectors and potentially leading to higher food costs due to the ripple effect on agricultural activities.