Mr. Carney recently announced an extension of the gas tax holiday, briefly eliminating the a 10 c/litre levy on gasolene (4c/l for Diesel and Aviation fuel) until January 31st 2027. Perhaps unsurprisingly, I feel this is a mistake. Yes it is true that gas prices have increased since Mr. Trump went to war with Iran (source), but making things artificially cheaper in times of scarcity is not a good way to solve the problem at hand. Surely there are better ways to invest $5.3B (source).
In normal times, oil tankers shuttle about 20% of global oil demand through the Strait of Hormuz. After Mr. Trump went to war, that is down substantially, but perhaps about half of gulf pre-war output is making it out to world markets via some other means. Say via overland pipelines, some tanker traffic, and other means (source). Nevertheless, about 10% of world oil supply is likely off-line now (source). In the short term, storage can help cushion the shock (source), and other suppliers can ramp up production (source).
Since that ramp-up can take time, lowering demand is crucial to avoid a serious problem, particularly as storage starts to run low (source). Higher oil prices provide a sensible reward mechanism to help all of us conserve and find ways to do with less oil (source). Avid readers of this blog will notice ample opportunities to reduce their oil consumption.
Even if you cannot quite get yourself an EV right now, (assuming you have not already), there is lots you can do (source). Does this trip really have to be by car? Try the bike, you may find it faster than driving, particularly in down town Toronto (source). Walking is a wonderful way to get around, and its far better for you than driving. Transit works well enough for lots of journeys. Driving to work and back sucks an hour or two of time out of your life, perhaps its time to try telecommuting?
Mr. Carney’s gas tax holiday steers Canadians back into their cars, which then results in yet higher fuel prices at the pump, after all we have a supply problem here. So at the end of the day, one has to wonder if that $5.3B loss of revenue bought anything for anyone? Looking at today’s gas prices, a little short of $2/l (Early September 2026, source), seems to lend some credibility for this, after all, when the announcement was made back in April, gas prices were about the same (source).
After all, that gas tax holiday does nothing to solve the underlying problem of encouraging Canadians to do with less oil. In some ways, I feel that Mr. Carney wasted $5.3B, this could have gone to much better use, for example Mr. Carney could have tripled the $2.3B EV affordability program budget (source). That would have actually helped solve the problem, helping Canadians do more with less oil.
