Gas prices drop, experts don’t expect major impacts beyond the pumps

Why did gas prices drop on Tuesday? CTV’s Colton Wiens explains.

Drivers across the country are getting a big break at the gas pumps, thanks to the elimination of the consumer carbon tax.

Gas prices dropped around 17 cents overnight, after the tax was axed at midnight. Drivers in Waterloo told CTV News they welcomed the change.

“Amazing. I wasn’t planning on getting gas, but I saw the price and decided to get gas today. Don’t even really need it, but may as well fill up before it goes up,” one driver said.

“Someone who’s been to Elora says, ‘Gas is 1.34’. I said it’s April Fools,” another driver said. “It’s lovely to have it lower. Got to buy gas regardless. Something makes a difference, that helps.”

“It’s nice to see gas prices finally going down for a change. It’s a nice break for Canadians. This is something that common families really need. It’s greatly appreciated,” another motorist said.

Experts told CTV News motorists should be seeing overall savings right away.

“If you happen to be using 30, 40 litres a week, the savings would be about $10. if you happen to be a diesel truck driver, it’ll be a lot closer to $15, if that’s all you’re using is 40 litres. But anything above that say, delivery vans or trucks. Or things like that, which might use 100, maybe 150 (litres) a week, the savings will be astounding - $30,” Dan McTeague, president of Canadians for Affordable Energy said.

Beyond the price at the pump, the average resident won’t see big savings elsewhere.

According to Mike von Massow, a professor and food economist at the University of Guelph, producers who need to dry grain, farmers using greenhouse and people heating barns may notice a difference in the margins, but it likely won’t impact the overall market.

“From a food perspective, I don’t expect a significant impact. And from agriculture, other than those specific types of farms we talked about, don’t see a big impact,” von Massow said.

“What this will help is farmer margins, which isn’t a bad thing in a year where prices are relatively low. But we are price takers in the world market. The fact that the cost of drying grain in Ontario or anywhere will go down a little bit will not affect the price of that grain, because it’s set in a global marketplace,” von Massow said.

When it comes to food prices, von Massow said they may drop 0.1 or 0.2 per cent, but the government will stop sending quarterly cheques that most Canadians received.

“Most Canadians are going to be worse off with the carbon tax disappearing because they’re not going to get the carbon tax dividend anymore. We all heard about the cost of the carbon tax, but we didn’t hear as much about the government did a poor job of launching it, of the quarterly payments that most people got. Most people, particularly low income people, were getting more from the carbon tax than they were paying for the carbon tax. So even if food prices come down a very small amount, I would expect especially low income people to be worse off,” von Massow said.

According to von Massow, people living in urban areas that don’t use a lot of gas were likely gaining money from the tax rebates and won’t see that anymore. However, von Massow said rural communities will likely welcome this change more.

“People in rural communities where public transit isn’t an option might have been closer to a push, but the more fuel you use, sort of the bigger your house was, the bigger your vehicle was, the less likely you were to be gaining from the carbon tax. For some people they’ll save a little money on the carbon tax, and maybe a tiny bit on the food. But for most people I think it will be a wash,” von Massow said.

The final rebate cheques are expected to be paid starting April 22 for anyone who filed tax returns before Wednesday. Anyone filing after that date will receive the rebate after their returns are assessed.