Pain at the Pump: Why Gas Prices Are Climbing Again in Canada — and How Bad It Could Get

gas prices are rising in Canada 2025

Canadians are feeling the pinch at the pump. The national average for regular gas sits around 133.8¢/L, up from 132.4¢ a week ago and still slightly below last month’s peak of 137.7¢. This sudden rise coincides with global events, especially the escalating Israel‑Iran conflict that’s rattling oil markets.


What’s Behind the Spike?

1. Middle East Tensions

  • June 13 saw geopolitical tensions cause a 7–11% surge in oil prices, largely due to concerns over the Strait of Hormuz, a critical transit point for global oil washingtonpost.com
  • Tony Sycamore (IG Australia) estimates each US$1 rise per barrel translates to about 1¢/L increase at the pump, so surges up to US$100 a barrel could push prices toward 220¢/L apnews.com

2. Supply & Inventories

  • U.S. data shows a large build in gasoline and diesel stocks, tempering further increases
  • OPEC+ also signaled plans to increase production by 411,000 bpd in July, helping stabilize supply reuters.com.

3. Seasonal Trends

  • Switchover to summer-grade fuel typically increases costs—but experts say this year’s rise is largely volatility-driven, not just seasonal

4. Policy Changes and Taxes

  • The federal consumer carbon tax was removed on April 1, cutting prices by approx. 15¢/L .
  • Provincial differences remain: BC still has higher gas costs (around 155¢/L) compared to Manitoba (≈128¢/L) .

Will Prices Continue to Rise?

Near-Term Outlook:

  • Geopolitical risk remains the main wildcard. If tensions escalate and disrupt supply routes like Hormuz, oil could surge to US$120–130/bbl, pushing gas past 180¢–200¢/L
  • But inventory builds and increased OPEC+ production may counterbalance volatility .

Medium-Term Factors:

  • Ongoing global trade uncertainty (e.g., U.S. tariffs) could impact oil demand and currency valuations, influencing pump prices .
  • Central banks may delay rate cuts if inflation remains high—further boosting energy prices

Long-Term Trends:

  • Climate-related policies, renewable energy adoption, and eventual stabilization of Middle East relations could cool prices.
  • Canadian fuel diversification and local production growth may help buffer future shocks.

Who’s Most Affected?

  • Canadian drivers– especially in BC and Atlantic provinces, which already have higher baseline prices.
  • Transport-intensive sectors, like trucking, farming, and airlines, which will see costs ripple through supply chains.
  • Consumers, as rising fuel costs contribute to inflation and impact prices on groceries and goods
  • Governments, because higher fuel taxes generate more revenue—but may also generate public pressure to provide relief.

Practical Takeaways for Canadians

1. Plan Your Fuel Budget
Expect weekly fluctuations—monitor sites like CAA’s gas tracker (133.8¢/L today)

2. Adopt Fuel-Efficient Habits
Drive smoothly, maintain your vehicle, and reduce idle time to save on fuel .

3. Stay Informed on Global Events
Middle East flashpoints and U.S. policy moves can trigger sudden price jumps.

4. Support Clean-Energy Alternatives
Lessening reliance on oil—through EVs or public transit—can shield you from volatility.


Ready for a Bumpy Ride

Gas prices in Canada recently ticked upward due to a mix of global conflict, supply dynamics, and seasonal patterns. While built inventories and OPEC+ actions may temper the climb, ongoing conflict could still send prices soaring past 180¢–200¢/L.

For now, brace for short-term swings, practice efficient driving, and consider long-term energy choices—because with global events holding the steering wheel, the only certainty is uncertainty.


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