The rising cost of diesel could ultimately inflate food prices by 30 to 35 per cent, compounding Canada’s inflation woes.
At least that is the take of one petroleum industry analyst.
Ontarians have seen gasoline prices rise to record levels in the wake of Russia’s decision to invade Ukraine with the average cost of a litre of fuel expected to rise even cents to $1.67.9 across the GTA as of midnight tonight. It is then expected to go up another seven cents to $1.74.9 a litre just 24 hours later.
But diesel prices have also been on an upward trajectory amid the geopolitical tensions and are now up five cents so far this week, with another seven cent increase forecasted for Thursday.
In an interview with CP24 on Wednesday, Canadians for Affordable Energy President Dan McTeague noted that “all modes of bringing products to market are usually driven by diesel” and for that reason its cost will have a more direct impact on the price of consumer goods over the coming weeks and months.
In fact, McTeague predicted that the rising cost of fuel will likely drive inflation to levels we have “probably not seen in our in our lifetime.”
“The reality is that with diesel moving much higher than gasoline, we're not only looking at higher fuel prices, but pretty much the cost of everything as if inflation isn’t high enough,” he said. “I am not an agro-economist but I can tell you in my discussions with many, which is part of my work here, we're looking at a 30 to 35 per cent increase in food prices as a result of these increases in diesel and we haven't even started the planting season yet.”
McTeague said that he anticipates that the price of gas in the GTA will hit $1.90 per litre or even $2 in the coming weeks, as sanctions limiting Russia’s ability to export oil push crude prices towards $120 a barrel.
Amid the price pressures some are calling on the feds to scrap a planned increase of the federal carbon tax from 8.8 cents to 11 cents per litre, including Brampton Mayor Patrick Brown.
During a briefing at Brampton City Hall earlier on Wednesday, Brown said that he is particularly concerned about inflationary pressures that will put “any additional burden on the backs of small businesses and families” that have already suffered throughout the COVID-19 pandemic.
He said that he is calling on the feds to “freeze” the April 1 increase for the time being.
“There should be no new burdens right now, no new taxes, as we try to get through this very difficult period,” he said. “There certainly shouldn't be an increase right now to gas prices, there shouldn't be an additional federal tax on something that we all rely on.”
Brown wrote a letter to finance Minister Chrystia Freeland on Wednesday reiterating his desire to see the planned increase to the federal carbon tax cancelled, arguing that “now is the wrong time for any new burden.”
Toronto Mayor John Tory was also asked about the planned tax hike at a briefing at city hall and offered tepid support for putting it on hold so long as it is done on a “very short-term basis.”
“These are important public policy initiatives that we have to move forward with to achieve our equally ambitious and important goals when it comes to climate change,” he said.
