After an extended stretch in which Canadians were able to get more bang for their buck at the gas station, fuel prices are climbing again, and it looks like consumers will feel more pain at the pump well into the new year.
All across the country – but most noticeably in Ontario and Alberta – the cost of unleaded gasoline is ratcheting higher. This wasn’t unexpected, however, as Ontario Environment Minister Glen Murray warned motorists about the impending spike in gas prices back in December, CBC News reported.
“It’s not a lot,” Murray said in an interview with Metro Morning, referencing the 4 cent per liter uptick that took effect Jan. 1 when the new climate change regulations kicked in. Part of the deal signed into law was a tax on carbon.
However, Dan McTeague, a senior petroleum analyst for the website Gas Buddy, begs to differ, telling CBC News that motorists won’t be seeing cheaper gas prices for long while.
“It’s a pretty substantial increase,” McTeague said, referencing the tax on carbon that’s part of the cap-and-trade program, designed to reduce Canada’s carbon footprint. “This is the new normal now for Toronto, the GTA and for Ontario and eventually for the country – much higher prices for fuel as governments want to discourage you from driving vehicles that are driven by fossil fuels.”
How much more will Canadians spend?
In the long run, the government is confident that the program will be a net positive for everyone. But the cost of living is expected to rise in the immediate future, both at the pump and in other aspects of individuals’ daily dealings. According to Maclean’s, the typical Ontario homeowner will spend in additional $150 to $200 annually in direct costs as a result of the carbon taxes and an extra $80 to $100 in yearly indirect expenses. Direct costs include gasoline, natural gas and other sources of home heating oil. Indirect costs include spending on food, as producers may raise prices due to added expenses they incur.
While an additional $100 to $200 is nothing to sneeze at – particularly for families living paycheck to paycheck – some don’t think the 4 cent increase goes far enough.
“I think gas prices should be higher,” Ontario resident Catherine Currie told CBC News while pumping gas into her automobile. “We should be using electric cars.”
Will more motorists ‘go green’?
Hybrid and all-electric vehicles have been widely available for a while now, but they haven’t been quite as popular as automakers anticipated, due to a variety of reasons. DesRosiers Automotive Consultants keeps track of monthly car sales, and smart vehicle purchases routinely finish well shy of other cars that run on regular unleaded.
However, some automakers are betting that the pain at the pump will result in more Canadians opting for an alternative.
“It’s a no-brainer, especially as the price of gas continues to climb,” said Stephen Beatty, Toyota Canada vice president, alluding to his expectation that hybrid vehicles will be more popular in 2017. “Today’s hybrid vehicles use about 30 percent less fuel on average than their conventional gas counterparts, so that’s a lot more money staying in people’s pockets.”
One of the world’s largest automotive manufacturers, Toyota had a successful year in 2016, selling 4 percent more vehicles in Canada than in 2015. A dramatic uptick in hybrid vehicles purchases helped in this regard, as 19,787 were sold – a 45 percent increase year over year. In fact, since 2000, approximately 75 percent of all hybrids sold in Canada were made by Toyota.
That being said, it appears that Ontarians will be spending more one way or the other, as the price of home heating oil will be affected by the cap-and-trade tax as well. At the end of the day, McTeague believes Ontarians will pay around $350 extra in 2017 compared to 2016, Global News reported.