Rising fuel and grocery costs hit Canadians as the Iran war disrupts global oil. Economists warn rebates won’t ease long-term price pressures.
Canadians Feel the Pinch as Oil Prices Surge
Canadians are paying more at the pump and grocery store as global energy costs spike following the U.S. and Israel’s conflict with Iran. The ripple effects of attacks on Gulf energy facilities are being felt from coast to coast, leaving families and unions calling for relief.
“When global instability drives up fuel and transportation costs, it doesn’t just hit the gas pump. It affects groceries, heating, and daily essentials, hitting working families hardest,” said the Canadian Labour Congress in a statement Thursday.
The group is urging Ottawa to expand support for workers, including the Canada Workers Benefit and grocery affordability measures, along with a proposed fuel rebate to ease rising expenses.
Currently, the national average for regular gasoline is just under $1.70 per litre, up from roughly $1.28 a month ago, according to CAA. For the average driver, filling up could cost $20 to $25 more each time.
Why Rebates Won’t Solve the Problem
While rebates may provide temporary relief, economists warn they won’t address the underlying issue of rising prices.
“If we handed out a fuel rebate, it would only treat the symptom — the higher costs. It wouldn’t actually lower fuel or grocery prices,” explained Mike von Massow, a food economist at the University of Guelph.
The conflict has pushed crude oil past US$110 per barrel, especially after Iran blocked the Strait of Hormuz, a vital shipping route. With no clear end in sight, long-term energy costs may continue to climb.
Financial constraints make widespread rebates difficult. “Even $1,000 per person per month would barely cover expenses. Across 40 million Canadians, that totals $480 billion — an unmanageable figure for governments already facing deficits,” said Concordia University economist Moshe Lander.
Canada does have some measures in place. The recently introduced Canada Groceries and Essentials Benefit aims to offset price hikes in food, but the oil shock goes beyond what domestic policy can control.
Global Strategies for Coping with Energy Shocks
Countries worldwide are encouraging citizens to cut energy use. In Thailand, civil servants now work from home, avoid overseas travel, and use stairs instead of elevators. Sri Lanka has rationed fuel, limiting motorcycles to five litres per week, cars to 15 litres, and buses to 60 litres.
In Canada, governments can nudge citizens toward public transit, cycling, walking, or carpooling, Lander said. But beyond short-term fixes, he emphasizes the need to rethink reliance on fossil fuels. “Investing in solar, wind, and nuclear energy isn’t just about reducing carbon emissions. It’s about preparing for the next global energy shock.”
Grocery Prices Likely to Climb
The oil crisis is already affecting fresh produce prices. “Imports of perishable items like fruits and vegetables will see almost immediate price increases, as transportation is a large cost component,” von Massow said.
Thankfully, as Canada’s growing season kicks in, these costs may ease. Local asparagus in May, strawberries in June, and other produce will travel shorter distances, helping curb prices over the summer months.
