The current 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 started. This week, the average retail price of diesel has reached $2.19 per liter, marking the highest price since 2022 during Russia’s invasion of Ukraine. In comparison, regular gasoline is being sold at an average of $1.75 per liter at gas stations, as reported by Kalibrate Canada, a firm specializing in fuel data and analytics.
The surge in diesel prices is expected to result in higher shipping costs, as diesel is crucial for the transportation industry to move trucks, trains, and barges. Andrew Lipow, president of Lipow Oil Associates, emphasized the significance of diesel prices, stating that they directly impact the delivery of consumer goods and services.
Various sectors such as farmers, trucking companies, and transit groups in the country are already feeling the financial strain caused by the spike in prices. Experts warn that these increased costs are likely to be passed on to consumers in the near future. Trevor Wideman, sales manager at West Coast Transportation in London, Ontario, highlighted the immediate impact of rising diesel prices on their operations, mentioning that conflicts in the Middle East often lead to instant increases in oil and fuel prices.
Transportation companies typically pass on these additional expenses, ultimately affecting consumers in various industries. The average diesel price on Tuesday was highest in Chicoutimi, Quebec, at $2.49 per liter, while Grande Prairie, Alberta, had the lowest price at $1.85 per liter.
Dennis Darby, chief executive of the Canadian Manufacturers and Exporters, pointed out that rising fuel prices pose challenges for companies already dealing with tariffs. High diesel costs not only drive up transportation expenses but also impact production processes in some facilities.
The conflict in the Middle East, particularly the closure of the vital shipping lane Strait of Hormuz, has significantly impacted global oil prices. North American oil prices have surged by nearly 50% since the conflict began. Trucking and rail companies have started to implement fuel surcharges to cope with the increased costs, according to industry analyst Lipow.
Lipow expressed concerns about the upcoming agricultural season, where farmers are preparing for spring planting using diesel fuel and higher-cost fertilizers. He anticipates that this will eventually lead to higher food prices. Additionally, Lipow believes that the war’s influence on diesel prices is unlikely to diminish soon, with projections suggesting it could persist for several more weeks. The conflict in Iran has disrupted not only crude oil production but also the exports of diesel and jet fuel from the Middle East, creating supply shortages and impacting global markets.
