Diesel Prices Surge Across Canada, Raising Costs for Farmers, Truckers and Consumers
Diesel Prices Surge Across Canada, Raising Costs for Farmers, Truckers and Consumers
Diesel prices across Canada have climbed to record levels, putting new pressure on farmers, trucking companies and businesses that rely on fuel to move goods across the country.
The national average price for diesel surpassed $2.50 per litre in mid-September, according to GasBuddy data cited by Canadian agricultural and energy publications. The increase comes as global energy markets face major supply disruptions linked to conflict in the Middle East and damage to refining infrastructure.
The surge is particularly painful for Canadian farmers, who are entering the fall harvest season when demand for diesel-powered machinery is high. A recent analysis by Grain Growers of Canada estimated that operating a large combine could cost about $33,600 in diesel during the 2026 harvest, compared with $18,480 the previous year—an increase of $15,120 for a single machine under its assumptions.
For truckers and freight companies, higher diesel prices can quickly translate into higher operating costs. Diesel powers much of Canada's road-freight network, meaning increases can eventually affect the cost of transporting food, manufactured goods and other products.
The pressure is already being felt in some provinces. In Nova Scotia, diesel prices increased by 21.6 cents per litre in less than a week in mid-September, according to provincial price data reported by CityNews. Industry observers warned that elevated fuel costs could put additional pressure on groceries and other consumer goods as transportation companies pass some costs through fuel surcharges. ** Global supply disruptions drive prices higher**
The latest Canadian increase is closely connected to developments in international oil and refined-fuel markets. Crude oil prices moved above US$100 a barrel in September as fighting around the Strait of Hormuz disrupted a crucial global energy-shipping route. At the same time, attacks and damage affecting refineries in Russia and the Middle East have tightened supplies of refined petroleum products, including diesel.
The result has been a sharp increase in diesel prices in North America. U.S. diesel prices recently moved above US$6 per gallon, according to the Associated Press, adding further pressure to an already tight international fuel market.
Ottawa extends fuel-tax relief
The federal government has responded by extending a temporary suspension of the federal fuel excise tax. Ottawa announced on September 15 that the suspension on diesel will remain in place through January 31, 2027. From February 1 through March 31, 2027, the federal diesel excise tax is scheduled to return at half its regular rate, or two cents per litre, before returning to four cents per litre on April 1.
The government says the measure is intended to reduce costs for households and businesses, including truckers, farmers, construction companies and delivery operators.
But the tax relief represents only one part of the price consumers pay at the pump. Crude oil costs, refining margins, transportation expenses and regional market conditions can all affect the final retail price.
Pressure could spread through the economy
Diesel's importance extends well beyond the fuel pump. Trucks, agricultural machinery, industrial equipment and other vehicles depend heavily on diesel, making the fuel an important input into the Canadian supply chain.
The Bank of Canada has also acknowledged the inflationary risk. In minutes released September 16, the central bank said it expected gasoline and diesel prices to remain elevated for longer than previously forecast because of geopolitical tensions and damage to refining capacity. It also noted that a broader pass-through of higher energy costs into other consumer prices could require a monetary-policy response.
For now, farmers and freight operators are among those facing the most immediate impact. With harvest underway and diesel prices at record levels, the cost of fuel is becoming a significant expense at a time when businesses have limited ability to absorb additional costs.
If international supply disruptions persist, Canadians could continue to see the effects not only at fuel pumps, but throughout the broader economy—from farm operations and trucking bills to the eventual price of goods on store shelves