Following the Carney government’s move to suspend the fuel excise tax, experts say drivers shouldn’t expect big savings.
The Prime Minister announced Tuesday, that Ottawa would pause the tax between April 20 and Labour Day, 2026.
Werner Antweiler, an economics professor at UBC’s Sauder School of Business, says to expect the move by the feds to have little impact on lowering costs on other things, like groceries, too.
“It’s only a small amount of variation that we have seen in the last little while, just coming from the situation in the Middle East” said Antweiler.
“It provides some relief, but it doesn’t really change the overall picture of this very critical situation that many motorists find themselves in, and especially the transportation businesses that rely on diesel fuel.”
Gas prices have been increasing around the globe since the onset of the U.S. and Israel’s attacks on Iran and disruptions to traffic in the Strait of Hormuz, curtailing the flow of millions of barrels of crude each day.
Antweiler says even if there was a peace deal tomorrow, it would take several months for the oil market to resolve its massive backlog.
“Not all of this relief will actually end up with motorists, and that’s sort of the downside of these measures,” he said.
“They provide some relief. Yes, some of it will end up with a motorist, but in the end, not a whole lot. And again, it’s not changing the underlying situation that will persist for some time.”
Related:
Antweiler says the rise in diesel fuel costs for the transportation sector is much more concerning.
“Now there is very little variation and reduction that they can bring to bear on saving fuel,” he said.
“This is going to be a cost that will percolate through the economy, that will drive up prices, raise prices in the grocery stores. And that is what I’m a lot more worried about long term than the effect it may have on the summer driving.”
Antweiler says even when the war comes to an end, there will be lasting repercussions in addition to the short-term shock.
Meanwhile, the rising price of airfare isn’t expected to drop at all, even with the suspension of the fuel excise tax.
Amra Durakovic with Flight Centre says airlines are spending billions of dollars more on fuel and have started to scale back on service.
“But they’re also cutting some routes that are less profitable to alleviate and conserve some of that fuel,” said Durakovic.
“WestJet, for example, recently announced that instead of having five flights from Calgary to Toronto daily, they’ve cut back to three.”
Related:
She says costs will continue to rise.
“Domestically, if you’re looking at a typical cross-country flight from Vancouver to Toronto, you’re using around 3,500 liters of fuel,” Durakovic explained.
“You’re looking at cost savings that roughly works out to about $1 per passenger. And airlines are already charging fuel surcharges between $25 to $60 per ticket. So really that only represents less than 3 per cent of those surcharges.”
Durakovic suggests looking at travelling during non-peak seasons to save on airfare, due to increased demand and fewer flight options heading into the summer.