Here’s Where Gas Prices in Canada Are Headed in 2023, According to Analysts

Motorists fuel up vehicles at a Shell gas station in Vancouver on March 8, 2022. Darryl Dyck/The Canadian Press

Canadians can expect to see high gasoline prices continue this year, but analysts differ on whether the record-setting peak of $2.10-per-litre national average seen in mid-June 2022—as reported by GasBuddy—could happen again.

Gas prices won’t decrease anytime soon, and 2023 will be “expensive and a repeat of 2022,” says Dan McTeague, president of Canadians for Affordable Energy.

McTeague said that while gas prices may have come down briefly around Christmas, he predicts the cost in 2023 will be similar to or higher than last year’s, especially with new carbon taxes planned by the federal government.

“The reality is that energy prices are going to remain high as long as there continues to be a sustained attack on the ability to produce, on the ability to distribute, on the ability to process fuel,” he told The Epoch Times.

Environmental, social, and governance (ESG) mandates—which are preventing investments in and divesting from fossil fuels—as well as barriers to pipeline development, regulations on markets, government caps on fuel production, carbon taxes, and the clean fuel standard are all “inevitable to the rise in the value and cost of fuel,” said McTeague.

Global demand for fuel continues to outpace supply, and McTeague predicts that by April, the increase in carbon taxes will be set at a rate higher than the rate of inflation.

“Gasoline on average costs about $1.44 a litre right now, but carbon taxes are going to increase [it by] three-and-a-half cents a litre on April 1 [from about 11 cents to over 14.3 cents a litre]. On July 1, there will be a second carbon tax, the clean fuel standard, which could see prices move up another 25 to 30 cents a litre by 2030,” he says.

“Energy prices [can be expected] to become intolerably more expensive, aided and abetted by the federal government and its allies in the NDP, Green Party, and the Bloc.”

A man pumps gas into his vehicle at an Esso gas station in Toronto on June 15, 2021. The Canadian Press/Tijana Martin

‘Taxes a Huge Part of the Pump Price’

The Canadian Taxpayers Federation (CTF) released its annual Gas Tax Honesty Report in May 2022, which indicated that various gas taxes account for up to 38 percent of the pump price. Besides the carbon tax, there are other taxes such as transit tax, excise tax at the provincial and federal levels, and sales tax at the provincial and federal levels.

Across the country, Canadians pay on average 55.1 cents in taxes per litre of gasoline. In Montreal and Vancouver, according to the report, drivers pay five and six different taxes respectively with each tank of gas.

“Taxes make up a huge part of the pump price,” CTF federal director Franco Terrazzano told The Epoch Times.

He said Prime Minister Justin Trudeau’s government has already raised the federal carbon tax three times since the beginning of COVID-19, and plans to continue imposing higher taxes. Rising by $10 per tonne of carbon annually, the tax has gone from $20 per tonne in 2019 to $50 per tonne in 2022, currently costing about 11 cents per litre of gasoline.

Starting in 2023, the government is increasing the federal carbon tax by $15 per tonne instead of $10 per tonne each year until 2030, when it will reach $170 per tonne, or 37.43 cents per litre of gasoline. Moreover, the CTF report said a second carbon tax added through fuel regulations will add another 11 cents per litre of gasoline by 2030, making carbon taxes alone account for about 48.6 cents per litre in 2030.

“Canadians have been struggling to afford gasoline, struggling to afford groceries, and worried about their heating bills, and the high taxes are making those concerns even worse. Canadians all over the country are struggling with high inflation, which has reached a four-decade high, and these massive tax bills are making things worse,” Terrazzano said.

“Even if the Trudeau government brings all industry to a screeching halt, carbon tax doesn’t actually do anything for the environment. Canada accounts for less than 2 percent of global emissions,” he added.

Inflation sits at 6.8 percent as of November 2022, according to Statistics Canada, which means the cost of living has gone up nearly 7 percent since November 2021.

If the central bank eases interest rates, McTeague says some parts of Canada could see fuel prices skyrocket to $2 a litre again. The current forecast is for even higher demand for fuel in 2023.

“Despite all the people who think they can simply wish away oil and gas, the reality is that the world needs a lot more,“ he says. ”It’s not just driving a car, it’s eating food from a grocery store, it’s wearing polyester, buying glasses, using paints and polymer, building a house. Everything—metal concrete, steel, insulation—cannot be made without hydrocarbons.”

Historic Fuel Prices in 2022

Patrick De Haan, head of petroleum analysis at GasBuddy, predicts gas prices could jump to close to $2 per litre again in some parts of the country in 2023, but “will not be quite as record-setting as 2022,” when the price of regular fuel peaked at a national average of $2.10 a litre in mid-June. Vancouver and Victoria had the highest prices that month for regular unleaded gasoline, at 2.25 a litre.

“I’m hopeful Canada can avoid the $2 per litre mark this year,” he told The Epoch Times.

The national average will get back to around $1.75 to $1.85 per litre, De Haan believes, but Canadians likely won’t see gas prices as low as the peak Canadian average in 2021 of $1.47 per litre perhaps ever again.

Gas prices tend to be lower in the winter, when reduced demand leads to reduced prices. However, De Haan noted that 5 percent of U.S. refineries shut down during COVID, either because of reduced demand due to lockdowns when people were driving less, or due to refinery fires or damage from hurricanes.

“Capacity is now inadequate, while demand for gas has rebounded back to close to normal levels,“ he said. “If Canadian politicians continue to clamp down on the industry and continue to drive regulatory requirements through the roof, it will disincentivize energy production.”