The federal carbon price increased on Monday, the change noticeable at Saskatchewan gas stations and on home energy bills.
The price increased to 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.
“For Canadians, it’s going to mean another $8 to $10 increase in what they are putting in their tank every week,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “For a family that does that every week, it could mean another $40 a month to fill your tank.”
Gas prices jumped about two centre per litre on Monday but the increases might not stop there.
“We could see more of an increase here over the next 24 to 48 hours as gas stations continue to pass along the higher price of the (carbon price) emissions,” De Haan said.
He said other factors might push up prices as well in the coming months, including the pressures of the summer driving season.
“Gas prices don’t usually peak in the summer, but just ahead of it. Think April and May.”
De Haan said that over the course of the summer, prices start to inch down, potentially going as low as $1.20 per litre later in 2024.
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“The idea is that by putting a price on pollution, people will use fewer fossil fuels, and that drives down overall emissions from the economy,” said Hadrian Mertins-Kirkwood, a senior researcher with the Canadian Centre for Policy Alternatives.
Public policy expert Chris Ragan said gradual increases to carbon price is the lowest cost way of reducing emissions in the country.
According to Ragan, one of the only other ways the federal government can promote carbon emission reduction is for them to impose “intrusive regulations.”
“You can imagine a government saying you have to swap out your furnaces from natural gas to electricity and you have to do it in two years and you have to pay for it yourself,” Ragan said.
He said the government could also use subsidies but said it would come with a massive tax hike.
“The beauty of the carbon (price) is that it is very flexible,” Ragan said. “Somebody might change the way they drive, somebody else might change the way they heat their house and somebody might change the way they take their vacations.”
He said the carbon price rebates are calibrated so 80 per cent of households in each Canadian province get a rebate back that is larger than what they pay through higher prices.
“Their purchasing power is maintained, but they are still incentivized to reduce their use of carbon-intensive things.”
Ragan said only the highest income households aren’t receiving higher rebates than what they paid towards carbon pricing.
Federal Natural Resources Minister Jonathan Wilkinson said roughly a month ago that Ottawa will no longer be giving the rebates to Saskatchewan residents because Premier Scott Moe’s government is refusing to remit the federal levy on natural gas.
“The rebates don’t generally always offset what many motorists are putting in their tank,” De Haan said. “This is going to be the reality moving forward as next year will also see an increase on April 1 in the carbon taxes.”
Moe in response threatened that the province won’t pay the levy on everything else affected by the carbon tax if residents don’t see rebates.
The minister in charge of SaskEnergy, Dustin Duncan, said he would be the one bearing the consequences of the province’s decision, which could include jail time.
In Ragan’s opinion, the federal government has done a poor job in explaining that carbon price increases are the cheapest ways to reduce emissions and how the rebates work.
“The logic isn’t to make you poorer. The logic is to incentivize you to consume less fossil fuels and less carbon intensive things,” he said.
Bill Prybylski, one of the vice-presidents with the Agricultural Producers Association of Saskatchewan said the carbon increase is going to hit provincial farmers hard.
“Anyone that uses propane or natural gas to heat their barns is going to take a hit as of today,” he said.
Diesel fuel burnt on the farm is exempt from the carbon price as a way to make production a little bit more affordable to farmers but commercial trucking, railroads and any other form of transportation is subject to the tax.
“They just pass those costs along, which we as producers end up paying those extra costs,” Prybylski said.
He said a 5,000 acre farm could be subject to roughly $30,000 in carbon pricing during the upcoming farming season.
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