according to Kalibrate analytics<\/a> – but industry experts say you don\u2019t need to be driving a diesel powered vehicle to be feeling the hit to your wallet.<\/p>\nWith Canada\u2019s transportation network dependent on diesel to move everything from groceries and furniture to electronics, every Canadian is expected to feel the financial hit of surging global diesel prices, if they haven\u2019t already.<\/p>\n
\u201cPretty much everything that we use, anything that is transported by truck, (or) by rail, or anything that goes from sea to the rail to trucks, all gets this cascading knock-on effect and it\u2019s real and it\u2019s almost immediate,\u201d said Dan McTeague, gas analyst and head of Canadians for Affordable Energy.<\/p>\n
He said Canadian businesses are already passing on to consumers the higher transportation costs caused by diesel price increases earlier this year. With diesel prices continuing to rise, those costs are expected to increase further.<\/p>\n
\u201cIn the next couple of weeks, businesses will be notified that they are going to be subject to additional fuel surcharges,\u201d said McTeague. <\/p>\n
\u201cWe\u2019ll see a signal in the next 30 to 60 days that higher fees to take that mode of transportation will go through — so it does have a real direct, and immediate impact on inflation and the cost of pretty much everything.\u201d<\/p>\n
McTeague added that the \u201ccost of living in this country will go up correspondingly.\u201d<\/p>\n
Diesel shortages around the world<\/p>\n
Diesel prices are surging because of a combination of high crude oil prices and an increasingly severe shortage of refined diesel around the world. <\/p>\n
Oil remains above US$100 a barrel amid continued instability in the Middle East, where attacks have disrupted major pipelines, refineries and shipping routes. <\/p>\n
At the same time, Ukrainian strikes on Russian refineries and restrictions on Russian fuel exports have further reduced global diesel supplies. <\/p>\n
That has pushed diesel refining margins to record levels in some markets, meaning the cost of turning crude oil into diesel has risen dramatically even when crude prices themselves ease. <\/p>\n
The result is a particularly tight global diesel market, with higher costs filtering through to trucking, agriculture, construction and the broader supply chain.<\/p>\n
\u201cThere is no end in sight to this problem,\u201d said Richard Masson, former CEO of the Alberta Petroleum Marketing Commission.<\/p>\n
\u201cThe refineries are damaged in many parts of the world — and so it\u2019s not like we can just pick a switch and turn them back on. It\u2019ll take months. So yes, there\u2019s a lot of pressure in the system right now.\u201d<\/p>\n
Masson adds that Canada is better off than other countries because it has its own refineries. However, when there is a global decrease of supply, all diesel consumers see a price increase.<\/p>\n
What\u2019s adding to the surge in diesel prices is also the belief that the situation with the supply chain in the Middle East doesn\u2019t appear to have an end in sight in the near future.<\/p>\n
\u201cIf everybody thought this was a two-month blip, they might be able to absorb the costs and get back to normal,\u201d added Mannon. <\/p>\n
\u201cBut the situation looks like it\u2019s going to carry on for months — and in that world, everybody who\u2019s paying these higher costs is going to try and pass it on to their customers. The impetus is to try to pass on your costs to make sure you don\u2019t go out of business.\u201d<\/p>\n
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