Ontario motorists should anticipate a notable increase in gasoline prices due to the recent surge in the carbon tax. Effective April 1, the carbon pricing in Canada rose by $15 per tonne, translating to a hike of approximately 3.3 cents per litre for gasoline, bringing the tax to 17.6 cents per litre. Similarly, diesel prices are expected to rise by about 4 cents per litre.
Carbon pricing is an integral component of the federal government’s strategy to diminish greenhouse gas emissions, with incremental increases slated annually until 2030. Provinces and territories were given the choice to either implement their own emission levy or adhere to the federal pricing model. Ontario, however, opted against establishing its own carbon pricing system.
In the 2024 budget, Premier Doug Ford prolonged the province’s reduction in gas and fuel tax rates, initially introduced in 2022 to counteract price hikes, until year-end. This measure reduces gasoline taxes by 5.7 cents per litre and fuel taxes by 5.3 cents per litre. The government estimates that this tax rate reduction has saved Ontario households an average of $320 since its inception in 2022, albeit at a cost of over a billion dollars in provincial funds.
It’s noteworthy that the federal government offers rebates to alleviate the burden of the carbon tax on consumers. Officials suggest that single individuals in Ontario may receive approximately $140 back upon filing their taxes.
How will this rise affect fuel prices?
Gasoline: With the carbon price climbing from $65 per tonne to $80, the levy on a litre of gasoline will now stand at 17.6 cents per litre, marking a 3.3-cent increase from previous levels. Filling a 50-litre tank from empty will now incur approximately $8.80 in carbon costs, about $1.65 more than before.
Diesel: The per-litre cost of diesel will now include 21.39 cents in carbon pricing, up from 17.38 cents previously.
Propane: The carbon price for propane will rise to 12.38 cents per litre, up from 10.08 cents. Filling a standard 20-pound barbecue propane tank will now cost approximately $2.20 in carbon fees, compared to $1.78 over the past year.
Natural gas: On average, Canadian households consume around 2,280 cubic meters of natural gas annually, primarily for heating purposes. With the carbon price reaching $80 per tonne, the levy will add 15.3 cents to each cubic meter of natural gas, up from 12.4 cents previously.
This results in an estimated annual carbon price of about $347 for natural gas, compared to $282 over the past year.
Food, textile, and other goods: Carbon pricing also entails indirect costs, as companies factor the expense into the pricing of their products and services to maintain profitability. While the exact impact varies by industry, Statistics Canada estimates that carbon pricing has increased food prices by approximately 0.3 percent and clothing prices by two percent since its introduction. The effects of the latest increase have yet to be fully assessed.