Canadian Gas Prices Drop After Government Scraps Carbon Tax

Canadian gasoline prices have fallen sharply after Prime Minister Mark Carney’s government eliminated a consumer carbon tax that had been in place since 2019, with the national average dropping by more than 11 cents per litre in just three days.

Data from fuel market tracker GasBuddy showed the national average for gasoline decreased from 155 cents per litre on Sunday to 143.6 cents by Wednesday, following the tax repeal that took effect on Tuesday.

Eight provinces recorded price declines exceeding six cents per litre, with New Brunswick seeing the steepest reduction of 15 cents. British Columbia and Ontario experienced drops of more than 10 cents per litre.

The carbon price for gasoline had been set at 17.6 cents per litre for the period from April 1, 2024, to March 31, 2025. Some regions may not yet reflect the full decrease due to retailer software adjustments and other market factors, GasBuddy analyst Patrick De Haan explained.

Quebec, which operates its own cap-and-trade carbon pricing system, bucked the national trend with gasoline prices rising 1.9 cents per litre on Tuesday.

Carney signed the order eliminating the tax on his first day in office, fulfilling a long-standing Conservative campaign promise. The Canadian Fuels Association projects a 20 cents per litre reduction in gasoline prices, potentially saving consumers more than C$500 annually.

Market analysts expect diesel prices to decrease by more than 20 cents per litre, which could benefit the broader economy by lowering costs for transportation, agriculture, and other sectors.

The final carbon tax rebate payments will begin April 22 for taxpayers who file their 2024 returns before Wednesday. Later filers will receive rebates after their returns are assessed.

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