Gas prices across Ontario and the Greater Toronto Area (GTA) are experiencing a significant drop following the recent elimination of the federal consumer carbon charge. This change took effect on April 1, 2025, after Prime Minister Mark Carney signed an order-in-council to scrap the tax, which had been a key policy under the previous government.
The consumer fuel charge was initially set at $80 per tonne and had been increasing annually since its introduction in 2019. Most recently, it added approximately 17.6 cents to the cost of each litre of gasoline. With its removal, analysts predict gas prices in Ontario could tumble between 17 to 20 cents a litre, with diesel prices expected to drop even further by about 21.4 cents per litre, according to Roger McKnight, chief petroleum analyst with En-Pro International.
As of 4 a.m. on April 1, the average price of gas in Canada was reported at $1.51.3 per litre. In Ontario, GasBuddy users noted prices ranging from $1.26.9 to $1.36.6 at various stations. This marks a significant reduction, with the lowest prices seen in the GTA since December 2022, when the cost at the pumps was 133.9 cents per litre.
Premier Doug Ford took to social media to celebrate the end of the carbon tax, calling it "the worst tax ever" and urging that all savings be passed on to consumers. He stated, "At midnight tonight, Canada is finally done with the federal carbon tax."
The removal of the consumer carbon charge has also led to the end of the Canada Carbon Rebate, which aimed to offset the costs incurred by consumers due to the tax. The final payment from this rebate program is set to be delivered to Canadians' bank accounts in April 2025.
Despite the anticipated decrease in prices, some analysts caution that fluctuations in crude oil prices and other factors, such as the inclusion of the Harmonized Sales Tax (HST) in the pump price, could influence the overall savings consumers see. Patrick De Haan, head of petroleum analysis at GasBuddy.com, noted that while the removal of the carbon charge is a significant factor in reducing prices, the underlying cost of oil is on the rise.
"While this is a fairly big lever that will help prices go down significantly, the underlying cost of oil is going up," De Haan explained. He suggested that the actual decrease consumers might experience could be closer to 15 cents per litre, rather than the full 20 cents predicted.
In addition to Ontario, gas prices in Edmonton and across Alberta have also seen a drop of about 20 cents per litre following the carbon tax removal. This shift is expected to have broader implications, particularly in sectors reliant on diesel for transportation, such as food shipping.
Quebec remains the only province in Canada that has not eliminated carbon pricing altogether, as it has maintained a cap-and-trade system since 2013. This leaves it as the last province still implementing a form of carbon pricing, while others have moved to abolish such measures amid growing public discontent over rising living costs.
As the summer approaches, some provinces are bracing for increased demand for gasoline, but analysts believe this will not significantly offset the savings consumers will see at the pumps. McKnight reiterated that the anticipated price drops mean "lower prices throughout the rest of the year," providing some relief to Canadians who have been grappling with inflation and high living costs.
Overall, the scrapping of the consumer carbon charge marks a notable shift in Canadian energy policy under Prime Minister Carney, who has indicated a commitment to maintaining the industrial carbon price while eliminating burdens on consumers. During the Liberal leadership race, Carney had pledged to end the consumer price, stating, "We will be eliminating the Canada fuel charge and the consumer fuel charge immediately," a promise he quickly acted upon upon taking office.
As Canadians await the final carbon rebate payment and adjust to the new pricing landscape, the impact of these changes on both consumer behavior and the broader economy will be closely monitored. With the promise of lower prices at the pump, many are hopeful that this move will ease some of the financial pressure they have been facing.
In summary, the removal of the federal consumer carbon charge has initiated a significant drop in gas prices across Ontario, the GTA, and beyond, with analysts predicting further decreases in the coming months. As the nation moves forward, the implications of these changes will be felt across various sectors of the economy, particularly in transportation and shipping.
