Canadian Gas Prices Soar Amid Global Conflict and Domestic Policy Shift

CANADA (Azat TV) – Canadian consumers are grappling with rapidly fluctuating fuel prices this week, driven by a volatile mix of escalating global crude oil costs, regional distribution dynamics, and divergent domestic energy policies. The sharp increases across provinces, particularly in Nova Scotia and Alberta, are reigniting immediate household cost concerns and fueling broader inflation worries.

In Nova Scotia, diesel prices skyrocketed by 14.9 cents overnight on March 7, 2026, doubling their rise within a week to reach levels well above two dollars a litre. This surge, which saw prices jump by 33 cents in a single week, was triggered by the Nova Scotia Energy Board’s use of the ‘interrupters clause,’ directly linked to the ongoing conflict in the Middle East, according to Halifax CityNews. Similarly, in Western Canada, Calgary experienced an 11.7-cent increase in gas prices and a 23.6-cent hike in diesel prices over the last week, while Edmonton saw gasoline climb by 14.6 cents and diesel by 18.3 cents, as reported by Daily Hive Calgary.

Global Crude Spikes Fuel Pump Price Hikes

The primary catalyst for these recent price hikes is the rapid ascent of global crude oil prices. West Texas Intermediate (WTI) crude is now trading at nearly US$90 a barrel, a significant jump from US$67 just a week prior, before the outbreak of intensified conflict in the Middle East. Suzanne Gray, a sales and service consultant with Kalibrate, explained that a ‘blockage’ related to the Middle East conflict is disrupting transportation and affecting production, causing Middle Eastern producers to reduce output. This ongoing instability suggests that crude oil prices, and consequently pump prices, may continue to rise, according to Gray.

The impact of geopolitical tensions on oil markets is creating a ripple effect on the broader economy. John Rapley, a contributing columnist for The Globe and Mail, highlighted that hotter-than-expected Personal Consumption Expenditure and Producer Price Index reports, coupled with increased input costs reported by manufacturers, signal higher prices are coming to supermarkets and retail stores. Any persistent rise in gas prices will exacerbate this inflationary pressure, making it harder for the Federal Reserve to cut interest rates and potentially making Canadian manufacturers less competitive, Rapley noted.

Canada’s Internal Energy Policy Divide

Beyond global market forces, Canada’s domestic energy policies are contributing to a complex and, at times, inconsistent pricing landscape. While eastern Canada is seeing significant energy developments, such as the Bay du Nord deepwater oil project reaching a key milestone in Newfoundland and Labrador, and the first recorded shipment of Australian LNG arriving at the Port of Saint John, New Brunswick, these projects appear to be treated differently from energy developments in Western Canada.

A key point of contention is the Memorandum of Understanding (MoU) signed between Canada and Alberta on November 27, 2025. This agreement has far-reaching implications for carbon pricing and major infrastructure, committing Western Canadian oil producers to a steep industrial carbon tax to underpin massive investments in decarbonization projects. For instance, the Pathways Alliance CCUS project, estimated at $16.5 billion, would require Canadian taxpayers to cover approximately 62% of the cost, while Western producers face an effective credit price of $130 per tonne under Alberta’s Technology Innovation and Emissions Reduction (TIER) Program, a significant increase from current market prices, Todayville reported.

In stark contrast, the Bay du Nord project and imported LNG and oil remain free from such stringent decarbonization considerations. Federal Fisheries Minister Joanne Thompson confirmed that the federal government is prepared to ‘de-risk’ the Bay du Nord project, covering potential international royalty payments to the International Seabed Authority (ISA), which could reach $1 billion over its lifespan. The federal government argues that projects like Bay du Nord, with their projected low upstream emissions intensity of under 8 kg CO₂e per barrel, qualify as ‘low emission’ oil and do not require the same mandatory decarbonization measures. This two-tiered policy has led some, including Bryan Gould, Executive Chairman of Aspenleaf Energy, to express concern that the MoU does not address key federal barriers to a free-market approach, leading to what critics describe as unfair regional favoritism and potential economic alienation in Western Canada.

Short-Term Outlook for Canadian Gas Prices

With global tensions persisting and domestic policy frameworks creating uneven playing fields, the immediate future for Canadian gas prices looks challenging. According to the gas forecasting site Gas Wizard, fuel prices are expected to rise again in both Calgary and Edmonton. Regular and premium gasoline are projected to increase by four cents, while diesel could jump by 10 cents in both cities. Consumers are advised to anticipate continued volatility and potential further increases at the pump in the coming weeks.

The current volatility in Canadian fuel prices underscores a growing tension between global energy market dynamics and complex domestic climate and energy policies. The disparate treatment of energy production and imports across different Canadian regions, while aiming for emission reduction targets, risks creating economic imbalances and undermining investment predictability, ultimately affecting consumer costs and Canada’s broader economic competitiveness.