The ongoing conflict between the U.S. and Israel against Iran has led to a significant increase in diesel prices across Canada, rising by almost 30% since the start of the war. This week, the average retail price of diesel reached $2.19 per liter, marking the highest price since 2022 when Russia invaded Ukraine. In comparison, regular gasoline is selling at an average of $1.75 per liter at the pumps, according to Kalibrate Canada, a fuel data and analytics firm.
The spike in diesel prices is expected to result in higher shipping costs as diesel is essential for the transportation sector to move trucks, trains, and barges. Andrew Lipow, 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 in Canada, including farmers, trucking companies, and transit groups, are already feeling the financial strain from the price surge, with experts warning that these increased costs may eventually be passed on to consumers. Trevor Wideman, sales manager at West Coast Transportation in London, Ontario, highlighted the immediate impact of rising diesel prices on their operations, noting that conflicts in the Middle East often lead to instant increases in oil and fuel prices.
The highest average diesel price on Tuesday was recorded in Chicoutimi, Quebec, at $2.49 per liter, while the lowest was in Grande Prairie, Alberta, at $1.85 per liter. Dennis Darby, chief executive of the Canadian Manufacturers and Exporters, highlighted the challenges companies are facing due to rising fuel prices, which are driving up transportation costs and affecting production facilities that use diesel.
The conflict in the Middle East, particularly the closure of the vital shipping lane, the Strait of Hormuz, has contributed to the increase in North American oil prices by nearly 50% since the conflict began. Analyst Lipow noted that trucking and rail companies are already implementing fuel surcharges, and concerns are growing about the impact on the upcoming agricultural season and food costs.
Lipow expressed pessimism about the immediate relief from the war’s impact on diesel prices, citing ongoing projections of an extended conflict. The disruption in crude oil production and exports of diesel and jet fuel from the Middle East, coupled with reduced refinery operating rates in Asia, is exacerbating the supply shortage and contributing to the escalating diesel prices.