Gas prices have fallen across Canada, but experts warn the drop may not last as global oil shortages and market uncertainty continue.
Canadians Welcome Lower Gas Prices — But There’s a Catch
After weeks of painful trips to the gas station, Canadians are finally seeing some relief at the pump. However, experts say drivers should not get too comfortable.
Fuel prices have dropped across the country following a tentative peace agreement between Iran and the United States. The deal includes plans to reopen the Strait of Hormuz, a key route for global oil shipments. As a result, fuel markets reacted quickly, and prices moved lower.
Even so, industry experts believe the current decline may only be temporary.
Drivers Still Feeling the Pressure
For Winnipeg resident Darnell Barrett, high fuel costs have already changed the way he lives.
He recently sold his Hummer because fuel expenses became too difficult to manage. While filling up his vehicle on Friday, Barrett said rising gas prices have put pressure on household budgets.
He explained that even people who manage their money carefully are struggling to keep up with higher fuel costs. According to Barrett, the situation has become a financial burden for many Canadians.
Another driver, Philip Intac, shared similar concerns.
He said higher fuel prices continue to eat into his monthly budget. As costs rise, Canadians have less money available for other essential expenses.
Like many drivers, Intac hopes prices will return to more stable levels soon.
Gas Prices Fall Across Canada
According to GasBuddy data, the national average price for gasoline stood at 163.9 cents per litre on Friday morning.
That figure represents a drop of more than five cents compared with last week. It is also nearly 25 cents lower than the national average recorded one month ago.
The decline followed news of the Middle East peace agreement, which eased concerns about potential disruptions to global oil supplies.
Yet despite the recent decrease, analysts say several challenges remain.
Experts Warn the Decline May Be Short-Lived
Dan McTeague, president of Canadians for Affordable Energy, believes current prices could be the lowest Canadians see for some time.
He expects fuel prices to rise by another five to six cents per litre nationwide.
According to McTeague, uncertainty continues to dominate global energy markets. Peace negotiations have moved forward at times, yet setbacks have followed. Because of that, market confidence remains fragile.
He also pointed to a growing global shortage of oil products, which continues to place upward pressure on prices.
While traders have largely removed the so-called “war premium” from oil prices, McTeague argues they may be overlooking deeper supply problems.
As a result, Canadians could face elevated fuel costs well beyond this year.
Return to Pre-Conflict Prices Could Take Years
Last year, the average gasoline price in Canada was about 135 cents per litre.
McTeague says Canadians should not expect prices to return to those levels anytime soon.
Unless a major economic downturn or significant geopolitical event changes market conditions, he believes fuel prices will remain above historical averages throughout 2026 and much of 2027.
He expects a more normal pricing environment to emerge sometime between late 2027 and 2028.
Tax Relief Helps, But Costs Remain High
The federal government suspended its gas and diesel tax in April. The temporary measure will remain in place until September 2026.
Officials estimated the suspension would lower gasoline prices by about 10 cents per litre and diesel prices by roughly four cents per litre.
Despite that relief, fuel costs remain noticeably higher than they were before recent global tensions emerged.
Shiu-Yik Au, an associate professor in the Department of Accounting and Finance at the University of Manitoba, said Canadians are still paying significantly more at the pump.
He noted that fuel prices in Manitoba and many other regions remain 20 to 30 cents higher than previous levels.
Rising Costs Continue to Squeeze Households
Higher fuel prices arrive at a difficult time for many families.
Canadians are still dealing with inflation, especially when buying groceries and other necessities. At the same time, economic growth remains uncertain.
Au said these combined pressures make rising transportation costs even harder to absorb.
Consequently, many households may need to rethink spending plans during the months ahead.
What Canadians Can Do Next
Although no one can predict developments in the Middle East, Au believes Canadians can focus on factors closer to home.
He says drivers should watch for possible tax measures from federal and provincial governments. In addition, future interest rate decisions from the Bank of Canada could provide some economic support.
Meanwhile, households may benefit from building extra savings where possible to help offset rising living costs.
Outlook Remains Uncertain
As summer begins, Canadians are enjoying lower gas prices. Nevertheless, experts caution that the relief could be temporary.
Global oil shortages, market volatility, and geopolitical uncertainty continue to shape fuel prices. Therefore, while today’s prices are lower than they were a few weeks ago, a quick return to pre-conflict levels appears unlikely.
For now, drivers may want to enjoy the savings while they last.
