Mark Carney’s fuel tax cut in effect — what can you expect?
· Toronto Sun
Canada’s fuel excise tax is now frozen until September.
It sounds promising, especially when you see the signs at gas stations, but what does it mean for Canadians right now?
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It’s not as great as it seems, gas analyst Dan McTeague told the Toronto Sun .
Prime Minister Mark Carney announced the move last week , adding that “Canadians are feeling the pressures of everyday expenses right now.”
The tax holiday will remove up to $0.10 per litre on gas and $0.04 per litre on diesel, costing the government about $2.4 billion, Carney said.
“The federal government’s 10 cents (in savings) is great. But by Wednesday, Canadians will have forgotten about it because it’ll be back up five cents a litre,” McTeague said.
How much is gas now — for now?
Let’s backtrack first. Over the weekend, prices at Toronto pumps were averaging about 182.9 cents per litre on Saturday and 174.9 cents per litre to 175.9 cents per litre on Sunday. By Monday, it averaged to about 163.9 cents per litre — a net drop of 11 cents a litre.
“That drop on Sunday would never have happened if Trump hadn’t come out and confidently said everything’s just fine, which he does quite often,” McTeague said.
And it’s that unpredictability, those erratic comments that will be troubling for everyone around the world amid the war in Iran, which prompted the blockade of the Strait of Hormuz once again after ceasefire talks between Iran and the United States stalled.
“Over the course of the next few days, the markets are going to have to recognize that nothing is getting better and starting as early as Wednesday, prices will be up another five cents,” McTeague said.
“A shortage, a supply or shortage crisis, that’s the real price the world has to pay in an environment that we see now,” he continued. “It can lead to some pretty difficult choices ahead because there just isn’t enough to go around, regardless of where you are.”
Supply is the real issue
McTeague noted that prices are soon going to have to reflect the truth.
“We’re dealing with physical damage to infrastructure in the Middle East, we’re dealing with dramatic drains in emergency supplies around the world,” he said.
“The reality is, we’re going to wind up in a serious shortage in which the world can’t recover quickly enough from, and that’s not just meaning higher prices, in many parts of the world it’s meaning no supply at all.”
McTeague acknowledged that we will “probably” be OK in Canada and won’t be as affected as the rest of the world, who may have to eventually ration the supply they have.
But once Carney’s tax holiday comes to end, what happens then? When that 10 cents is restored, what happens if the prices remain as high as they currently are?
By most estimates, according to McTeague, the world is probably short a billion barrels or more, something that’s “not going to be made up easily.”
“It’s not a good situation, it’s a lot of moving parts, and isn’t going away anytime soon.”