Canada gasoline prices slide on removal of consumer carbon tax

By Shariq Khan

NEW YORK, April 2 (Reuters) - Retail prices for gasoline fell sharply across Canada after the government on Tuesday removed consumer carbon taxes that had been in effect since 2019.

Mark Carney signed an order eliminating the Justin Trudeau-era consumer carbon tax on his first day as Canada's Prime Minister earlier this month, declaring the move will make a difference to hard-pressed Canadians. Conservatives in opposition had long campaigned against the tax.

Eight provinces saw fuel prices decline by over six cents per litre on Tuesday, after the taxation officially ceased, according to data by fuel markets tracker GasBuddy.

National average prices for gasoline in Canada fell from near 155 cents per litre on Sunday to 143.6 cents a litre on Wednesday, the data showed. New Brunswick saw the largest decline, of 15 cents per litre, while British Columbia and Ontario saw drops of over 10 cents per litre.

"The drops continue to widen," GasBuddy analyst Patrick De Haan said in an email on Tuesday.

Carbon prices for gasoline from April 1, 2024 to March 31, 2025 were 17.6 cents per litre, so prices should fall by that much, said Susan Bell, an executive at Rystad Energy.

The Canadian Fuels Association said it expects a 20 cents per litre reduction in gasoline prices, translating to savings of more than C$500 per year for consumers.

Quebec, which now becomes the only Canadian province with a carbon levy through its cap-and-trade program, saw gasoline prices rise 1.9 cents per litre on Tuesday, GasBuddy data showed.

Lower fuel prices could spur some Canadians to forego flights to the United States in favor of driving to domestic vacation destinations, Bell said.

Still, the ongoing trade war with the U.S. could raise Canada's unemployment rate, which would weigh on gasoline consumption, she added.

U.S. President Donald Trump is set to announce reciprocal tariffs against trade partners including Canada later on Wednesday.

The Canadian Fuels Association also noted that the potential impact to fuel demand from the tax repeal was hard to gauge.

"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 for the industry group said.