The federal government's temporary suspension of the gasoline excise tax will end on Sept 7, meaning the tax could be reinstated as early as that date. Consumer groups say the change could add roughly 10 to 11 cents per litre to the price at the pump.
Excise tax expiry and price impact
Dan McTeague, president of Canadians for Affordable Energy, says the tax removal has softened the recent surge in fuel costs but has not stopped the broader price climb. "The effect has been to provide at least some mitigating factors in terms of higher prices but it hasn't been able to hold back the stampede towards higher prices that have cascaded into the rest of the economy," he told reporters.
Canada's national average for regular gasoline sits at about CA$1.67 per litre, up from CA$1.64 a week earlier and well above the CA$1.33 level recorded a year ago. If the excise tax returns, the increase could be felt immediately, although a seasonal shift to winter‑grade fuel later in the month may soften the impact.
Canada's fuel suppliers must switch from summer‑grade gasoline, which reduces emissions in warm weather, to winter‑grade blends that contain cheaper butane and flow better in cold temperatures. The transition is scheduled to begin after Sept 15, a week after the tax deadline. McTeague estimates the seasonal change could lower prices by eight or nine cents per litre, depending on the region.
Global oil market pressure
Higher pump prices are also tied to the ongoing Iran war, which has constrained crude supplies through the Strait of Hormuz, a chokepoint that normally carries about a fifth of the world's oil. The conflict has damaged regional infrastructure and heightened the risk of further disruptions.
U.S. benchmark West Texas Intermediate was trading near US$82 a barrel at the time of writing, down slightly from a recent peak of US$83 but still well above the US$75 level recorded a week earlier. The International Energy Agency warned that while global demand may dip in the short term as higher prices curb consumption, supply risks remain "substantial" and could push demand higher again next year.
McTeague cautions that prolonged supply constraints could keep fuel prices elevated for an extended period. "There is going to be much higher prices for longer, and if we're uncomfortable with these prices, we're going to have to get used to them for a very long period of time," he said.
At present it is unclear whether Ottawa will extend the tax suspension beyond the September deadline. The decision will likely hinge on how quickly global oil markets stabilise and how domestic price trends evolve in the weeks after the tax reinstatement.
Based on reporting by Global News.