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Relief at the pumps in Ontario following the end of consumer carbon pricing has proven short-lived, with gas prices now nearly erasing those savings.
According to the Canadian Taxpayers Federation, carbon pricing had added 17.6 cents per litre to the cost for drivers in Ontario last year. Yet today, gas prices are only about five cents lower than they were a year ago.
Industry analyst Dan McTeague, president of Canadians for Affordable Energy, says several factors are driving the increase:
Clean fuel regulations: The rise in ethanol-blended gasoline, mostly produced in Canada from corn or wheat, is raising costs. While ethanol lowers emissions, it burns less efficiently, meaning drivers use more fuel. To further meet emission requirements, refineries are also relying on carbon offsets, which add about five to six cents per litre now, and could rise to 20 cents by 2030.
Weaker Canadian dollar: Compared to last year, the weaker loonie adds around two cents per litre.
Wholesale gasoline prices: U.S. gasoline, which sets the benchmark, is nearly 30 cents a gallon higher year-over-year, translating to an additional 11 cents per litre in Canada.
Adding these factors together — carbon offsets, currency exchange, and wholesale gasoline prices — results in gas costing 18 cents per litre more than last year, effectively wiping out the 17.6 cents per litre savings consumers saw when the carbon tax was scrapped in April.
Currently, prices at the pump sit at 144.9 cents per litre in much of the GTA and Ottawa, 143.9 in Barrie, 138.9 in Hamilton, Sarnia and London, 137.9 in Waterloo, 136.9 in Windsor, and 131.9 in Kingston, according to Gas Wizard.
Gas stations themselves add about seven to nine cents per litre to cover operational costs. McTeague notes that many stations reduce these margins in the evenings, sometimes selling fuel at cost to stay competitive.
His advice to drivers: “Never ever ever buy your gasoline before 6 p.m. Never. Because you’re just giving eight, nine cents away to the gas station.”
While a further drop of seven to eight cents per litre is expected by September 15 with the seasonal switch from summer to winter gasoline blends, many consumers remain frustrated that their anticipated savings have already vanished.
