NEW YORK, April 2 (Reuters) — Gasoline prices across Canada dropped sharply on Tuesday after the government removed the consumer carbon tax that had been in place since 2019.
Prime Minister Mark Carney signed an order eliminating the carbon tax on his first day in office earlier this month. The move, he said, would provide relief to Canadians facing high costs. The carbon tax, introduced during Justin Trudeau’s tenure, had been a target for the opposition Conservatives, who long campaigned for its removal.
Fuel prices fell by more than six cents per liter in eight provinces on Tuesday, following the official removal of the tax, according to data from fuel market tracker GasBuddy. National average gasoline prices in Canada dropped from about 155 cents per liter on Sunday to 143.6 cents per liter on Wednesday. New Brunswick saw the largest drop, with prices falling 15 cents per liter, while British Columbia and Ontario experienced reductions of more than 10 cents per liter.
“The drops continue to widen,” said Patrick De Haan, an analyst at GasBuddy, in an email on Tuesday.
From April 1, 2024, to March 31, 2025, carbon taxes on gasoline were 17.6 cents per liter, meaning prices should have dropped by that amount, said Susan Bell, an executive at Rystad Energy. The Canadian Fuels Association estimated that gasoline prices could fall by 20 cents per liter, providing consumers with savings of over C$500 per year.
However, Quebec, which remains the only province with a carbon levy under its cap-and-trade system, saw gasoline prices rise by 1.9 cents per liter on Tuesday, according to GasBuddy data.
The reduction in fuel prices could encourage some Canadians to drive to domestic vacation spots instead of flying to the U.S., Bell noted.
Still, the ongoing trade tensions between the U.S. and Canada could increase unemployment rates in Canada, which might reduce overall gasoline demand, she added.
U.S. President Donald Trump is expected to announce reciprocal tariffs on trade partners, including Canada, later on Wednesday.
The Canadian Fuels Association also pointed out that the full impact of the tax removal on fuel demand is hard to predict. “There are simply too many other factors affecting demand, especially with the uncertainty of the global economy and the potential impact of U.S. tariffs,” a spokesperson for the group said.
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