Most of us are acutely aware of gasoline prices as we deal with them frequently when we fill up our non-electric vehicles. But not many of us pay as much attention to the price of diesel fuel, even though that affects us all at least as much, if not more. Even if we do pay a bit of attention to the price of diesel, we have probably noticed that it has historically been considerably lower than the price of gasoline. As we hear constantly from governments about the transition underway away from fossil fuels to “renewable” (more like unreliable) energy sources, there is little mention of the incredible importance of diesel fuel to our everyday lives.
In a nutshell, diesel fuel is an essential source of energy that powers the global supply chain, transportation, construction, agriculture, heavy machinery, emergency back-up power systems and much more. Our lives would be dramatically different without diesel fuel. From a technical standpoint, diesel is “energy dense,” meaning that it contains more energy per litre than gasoline and is therefore a more efficient fuel. Diesel requires more robust engine components as it ignites under compression, not spark plugs, which means diesel engines last longer and require less maintenance than gasoline engines. Diesel fuel is a byproduct to the petroleum refining process and is denser than other fuels. There is no replacement for fossil-fuel based diesel that currently exists, no matter how much the net zero nutters try to tell you otherwise.
So why is this important today? Because the price of diesel fuel is skyrocketing, and that will have major impacts on the rate of inflation and our economy in general. In many places, including Atlantic Canada, diesel is also used as heating fuel. As we are now entering into the season of higher demand for heating, this could further boost prices and even create shortages. This is by no means just a Canadian problem, as virtually all of the world’s economies are just as dependent on diesel as is Canada.
So why is diesel so pricey right now, when it is historically cheaper than gasoline? As usual, there are a number of factors driving diesel prices. Global inventories are tight, and refining capacity is constrained. The geopolitical disruptions in the Middle East are also affecting the supply of diesel as they are affecting gasoline and other fossil fuel products. In countries like Canada and Europe where restrictions are being put on refineries to try to reduce emissions and produce “cleaner” fossil fuels, higher costs of production also increase product prices. Because diesel has no effective replacements and demand is growing, any restriction in supply is bound to drive up prices.
All of these factors have conspired to hike diesel prices enormously, which will likely continue for months if not years to come. A lessening of political tensions world-wide is the biggest factor that could bring diesel prices back down to reasonable levels. The removal of carbon taxes by the governments that are imposing them – such as in Canada – would also be welcome as they would reduce diesel costs. Yet it seems that neither of these things will occur anytime soon. Global issues are out of Canada’s control, but our government could surely lighten up on its punishment of Canadians by lessening or removing industrial carbon taxes, which are one factor driving the increase in diesel prices.
Unfortunately, the diesel price escalation is yet another challenge facing not just Canada, but the world economy as well. It will be another contributing factor to the slowdown in international economic growth at a time when it is least needed. And sadly, diesel price hikes will just add to our current inflationary woes. For anyone who was planning to go on a diet, this might be welcome as you may not have much choice but to reduce your food consumption as prices increase. For the rest of us, it is yet another indication of how our present global economic system and so-called climate policies are not working well for average citizens.
Catherine Swift was President of the Coalition of Concerned Manufacturers & Businesses Canada from 2022 to 2026. She was previously President of Working Canadians from 2015-2021 & President & CEO of the Canadian Federation of Independent Business (CFIB) from 1995-2014. She was Chief Economist of the CFIB from 1987-1995, Senior Economist with TD Bank from 1983-1987 & held several positions with the federal government from 1976-1983.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
