What happened
Diesel prices in Canada have reached historic highs, with retail diesel prices topping $2.64 per liter. This represents a 60% increase from pre-Iran war prices and a 15% increase from previous record highs in 2022.
The price surge is attributed to supply disruptions caused by the closure of the Strait of Hormuz, which has resulted in reduced energy output for seven months. As a result, crude distillation facilities have slashed production, leading to elevated fuel costs.
Experts warn that the increased fuel costs will lead to higher prices for various items, including food, clothing, and construction materials, in the coming months. Additionally, diesel demand is expected to rise further as winter approaches, which will likely exacerbate the pricing surge.
The impact of the diesel price increase will be felt across various industries, including farming, trucking, and shipping. Freight railway fuel surcharges for October have already increased by as much as 73% compared to early August.
