A lot of Canadians may have observed that the price to refill their tanks has decreased over the past several weeks.
Meanwhile,Reuters statedthattheCEOs ofCanadianoilandgascompaniesexpressedonTuesdaytheirdesiretoavoidmakinghastydecisionsas global oil prices float near four-year lows with recession concerns escalating.
Several potential causes can explain these price drops, including specific reasons for Canadian individuals alongside global influences impacting both drivers and general consumers.
Before triggering the federal election, the Liberal Party eliminated the consumer carbon price but maintained the industrial carbon price for major emitters.
On April 1, the consumer carbon price ceased. This month, many gasoline stations throughout the nation have seen a reduction of about 15 to 20 cents per liter.
"This represents one of the largest declines in gas prices we have witnessed throughout Canada. This underscores the significant impact that the carbon tax has had on Canadian consumers," explains Patrick De Haan, a petroleum analyst from GasBuddy.
Video: China pledges to 'go all out' following Trump's threat of imposing 50% tariffs
However, the lower price of gasoline has an additional layer to the narrative.
The stock market has declined since U.S. President Donald Trump initiated a trade conflict by enforcing tariffs on various nations such as Canada, which has sparked concerns about a potential worldwide economic downturn.
The price of oil hinges on predictions regarding supply and demand. Should an economic downturn be anticipated, forecasts suggest that both individuals and industries would consume less oil across various sectors such as automobiles, lorries, aircrafts, maritime vessels, locomotives, machinery, and others.
Fortunately, fuel prices at the pumps have significantly decreased this month, causing many people to feel less worried when that warning light appears on their dashboard.
The nationwide average is currently floating at approximately $1.30 per litre, which is lower than what was reported by the Canadian Automobile Association. The national average from one year ago was $1.63 per liter. Therefore, with an average fuel tank capacity of 50 liters, filling up the tank is currently around $15 cheaper compared to what it was a year ago. Owners of bigger vehicles like SUVs and pickup trucks might see even greater savings.
The carbon price has long been a hot-button issue for Canadians because of the added cost for consumers in addition to industry polluters.
Previous Prime Minister Justin Trudeau implemented rebate programs to mitigate the extra expenses for typical Canadians, distributing these benefits multiple times annually based on eligibility criteria.
The last reimbursement will be deposited into bank accounts beginning April 22, contingent upon when the 2024 tax returns are submitted to the CRA.
It’s challenging to determine the effectiveness of the carbon price in reducing emissions. However, Liberal Leader Mark Carney has indicated that if his party wins reelection on April 28, they may consider an alternate approach rather than imposing a consumer carbon tax.
Conservative Leader Pierre Poilievre has pledged to eliminate the industrial carbon pricing scheme as well.
Video: Federal party leaders campaign in British Columbia
The cost of crude oil, from which the gasoline we purchase at filling stations is derived, is also causing a decline in gas prices.
More on Lifestyle
- New York cautions travelers about Canada: 'Measles is merely a drive away!'
- Medication such as Ozempic may 'substantially' reduce Alzheimer's risk, according to research findings.
- Prince Harry makes rare court appearance for U.K. security detail case
With the removal of the consumer carbon price, De Haan indicates that prices will be influenced by various elements such as "the falling cost of oil and OPEC+ increasing output."
"There are still many other mechanisms continuously adjusting," he stated.
The global oil consortium referred to as OPEC+, encompassing numerous Middle East suppliers, intends to boost output levels. This move aims to introduce additional volumes of crude oil into the market. With increased availability of oil for processing, downward pressure tends to be exerted on pricing, frequently resulting in reduced costs at fuel stations.
It remains unclear why OPEC+ intends to boost production when there are predictions of decreased demand due to an economic slowdown caused by Trump's tariffs.
"The looming specter of a worldwide trade conflict has led to a sharp drop in oil prices per barrel, which will likely result in further reductions in gasoline costs. Moreover, last week, OPEC+ opted to boost production at an unprecedented rate," stated De Haan.
De Haan suggests that this approach might not be sustainable if an excessive amount of oil floods the market. This could weaken the economic position of OPEC+ countries along with those of Canada and the U.S., since the worth of investment in production has dropped. In essence, inexpensive oil poses challenges globally for various economies.
On Tuesday, oil prices fell below the $60 mark for each barrel and stayed close to their four-year low levels. This decline was driven by concerns about an economic downturn worsened by the ongoing trade dispute between the U.S. and China, despite improvements seen in stock market performance according to reports from Reuters.
In a research report, ATB Capital Markets stated that they anticipate an increase in Canadian production for the current year; however, they cautioned that persistently low oil prices could exert downward pressure on company expenditures, thereby restricting the pace of output expansion.
The CEO of Calgary’s InPlay Oil, Doug Bartole, stated that the company has no plans to decrease production levels or cut back on capital expenditures in the near future, even though oil prices have dropped recently due to tariffs.
"Do not rush into any hasty choices. Instead, let’s adopt a broader perspective and observe how everything unfolds,” Bartole stated during an interview in Toronto.
Predicting the duration for which prices will stay at their current reduced levels is challenging, yet they have the potential to shift drastically overnight due to numerous influencing elements.
Geopolitical factors aside, summer driving season is just around the corner, a peak demand for travel. Be it by road, rail, air or water, chances are that prices for oil and gasoline will likely increase over the coming months due to seasonal demand.
Therefore, it could be worthwhile to fill up and start making your travel arrangements sooner rather than later.