Retail fuel prices have dropped significantly across Canada after the federal government scrapped the consumer carbon tax, in place since 2019, in a dramatic policy shift under newly appointed Prime Minister Mark Carney.
On his first day in office earlier this month, Carney signed an executive order eliminating the tax introduced during Justin Trudeau’s tenure. The move was described as a bid to provide relief to Canadian households grappling with the rising cost of living. The Conservative Party had long criticised the carbon levy, making its repeal a key campaign issue.
According to fuel price tracking service GasBuddy, motorists in eight provinces saw prices at the pump fall by more than six cents per litre on Tuesday, the day the tax was officially removed. Nationally, the average cost of petrol fell from nearly 155 cents per litre on Sunday to 143.6 cents per litre by Wednesday.
New Brunswick recorded the steepest decline, with prices dropping by 15 cents per litre, while British Columbia and Ontario also saw reductions of more than 10 cents.
“The drops continue to widen,” said Patrick De Haan, a senior analyst at GasBuddy.
Carbon pricing on petrol had stood at 17.6 cents per litre for the current fiscal year, from 1 April 2024 to 31 March 2025. Given that, prices are expected to fall by a similar margin, said Susan Bell, an executive at energy consultancy Rystad Energy.
The Canadian Fuels Association projected an even greater price reduction—up to 20 cents per litre—which it said could translate into annual savings of more than C$500 for Canadian drivers.
Quebec now stands as the sole province still enforcing a carbon charge through its cap-and-trade system. Unlike other provinces, it experienced a 1.9 cent per litre increase in petrol prices on Tuesday, according to GasBuddy.
With fuel becoming more affordable, some analysts suggest Canadians may opt to drive to domestic holiday destinations rather than fly or cross into the United States. However, Bell warned that broader economic uncertainties, including a growing trade dispute with the U.S., could limit any increase in petrol demand.
U.S. President Donald Trump is expected to announce retaliatory tariffs on Wednesday, targeting several trade partners, including Canada.
The Canadian Fuels Association noted that while the tax repeal will offer relief at the pump, its overall impact on fuel demand remains unclear.
“There are simply too many other factors impacting demand, particularly around where the global economy is heading on the backdrop of the U.S. tariffs of April 2,” a spokesperson said.
