Diesel prices in Canada have surged by almost 30% due to the ongoing conflict between the United States, Israel, and Iran. The average cost of diesel has hit $2.19 per liter this week, marking the highest price since 2022 when Russia invaded Ukraine. In comparison, regular gasoline is currently priced at an average of $1.75 per liter at gas stations, according to Kalibrate Canada, a fuel data and analytics company.
The sharp increase in diesel prices is expected to lead to higher shipping expenses as diesel is crucial for the transportation industry, powering trucks, trains, and barges. Andrew Lipow, the president of Lipow Oil Associates, emphasized the significance of diesel prices, noting that 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, potentially leading to cost increases for consumers. Trevor Wideman, a sales manager at West Coast Transportation in London, Ontario, highlighted the immediate impact of Middle East conflicts on oil and fuel prices, affecting businesses like his that rely on large diesel tank refills for their semi trucks.
With the highest average diesel price recorded in Chicoutimi, Quebec, at $2.49 per liter and the lowest in Grande Prairie, Alberta, at $1.85, transportation companies are passing on the increased expenses to consumers, affecting various industries. Dennis Darby, the chief executive of the Canadian Manufacturers and Exporters, pointed out that rising diesel costs are compounding challenges for companies facing tariffs, as transportation expenses surge and some facilities rely on diesel in their production processes.
The closure of the vital shipping lane, the Strait of Hormuz, due to the Middle East conflict has disrupted global oil and natural gas supply chains, contributing to a nearly 50% increase in North American oil prices. As a result, trucking and rail companies are implementing fuel surcharges, anticipating continued price hikes in diesel. Lipow expressed concerns about the prolonged impact of the conflict on diesel prices, citing disruptions in crude oil and diesel exports from the Middle East as well as reduced refinery operations in Asia, which could exacerbate supply shortages.