Overseas conflict between Israel and Iran causes diesel prices to climb in Canada

A person pumps gas at a gas station in Mississauga, Ont., Tuesday, Feb. 13, 2024. THE CANADIAN PRESS/Christopher Katsarov

The conflict between Israel and Iran is fuelling a rise in diesel prices across Canada.

The cost of diesel fuel has jumped more than 6 cents per litre in Nova Scotia. Several days earlier, prices climbed by more than 7 cents per litre in New Brunswick.

According to petroleum analyst Patrick De Haan, jarring increases in diesel prices are happening across Canada and around North America with more hikes expected.

“Just about up everywhere, diesel is more than gasoline and you will find that south of the border as well,” said De Haan. “That is something we have been predicting that diesel could go up 10 to 20 cents a litre.”

The diesel price increases in Nova Scotia came after the province’s energy board invoked the Interrupter Clause, responding to changes in geopolitical global issues. De Haan said the ongoing conflict between Israel and Iran has resulted in diesel prices climbing to their highest levels in years and it’s linked to supply and demand issues.

“The troublesome spot has been distillates which are diesel, heating oil and things like that and inventories of distillates are almost 20 per cent below the five-year average for this time of year,” said De Haan. “When you talk about the conflict in the Middle East and inventories being vastly below normal, that is going to have an impact on those types of products.”

For Nova Scotia trucker James Roache, the already pricey cost to do business is now even more expensive.

“It’s hard enough to put diesel in trucks, as it is,” said Roache who added, when fuel goes up, the cost usually gets tacked onto product prices and is then passed along to customers. “Well, companies usually put their prices up.”

Truck companies usually deploy a fuel surcharge to cover the added diesel cost, according to Atlantic Provinces Trucking Association Executive Director, Chris McKee.

“For the most part, they’ve been able to pass this cost along to shippers who then decide if they are going to pass that along to the consumers.”

A cost increase can be especially tough for independent truck drivers and smaller companies.

“When we see prices jump by 7 cents per litre, that equates to an additional $70-$100 per fill-up,” said McKee.

De Haan said the instability in the Middle East could cause these rising diesel prices to climb even higher, not just in North America, but around the world.