Record Diesel Prices During Harvest Threaten Economy and Grocery Bills
- Diesel prices across Canada and the United States have surged to all-time record highs, squeezing agricultural producers during peak harvest and threatening to drive up retail costs for...
- The spike in diesel prices stems from a combination of constrained global crude markets and outsized refinery profits.
- The record-high fuel costs coincide directly with the autumn harvest, when on-farm diesel usage reaches its annual peak.
Diesel prices across Canada and the United States have surged to all-time record highs, squeezing agricultural producers during peak harvest and threatening to drive up retail costs for consumers. According to Patrick De Haan, head of petroleum analysis for GasBuddy, the Canadian national average surpassed $2.50 per litre as of September 13. In parts of Canada, prices reached $2.751 a litre on September 17. Meanwhile, U.S. diesel prices have exceeded US$5.85 per gallon over the preceding two weeks, topping the previous record set in June 2022 and running about US$2 higher than levels seen a year prior.
Refinery Margins and Global Supply Disruptions Drive Surging Costs
The spike in diesel prices stems from a combination of constrained global crude markets and outsized refinery profits. Crude oil futures have traded above US$100 a barrel amid ongoing instability in the Middle East, including shipments disrupted through the Strait of Hormuz, alongside reduced Russian refining capacity following Ukrainian strikes that knocked key facilities offline. However, economists note that crude costs alone do not account for the entire price surge at the pump. According to reporting from the Edmonton Journal cited by regional outlets, Canadian refining margins—the difference between the cost of crude oil and the price of finished diesel, known as the “crack spread”—topped 110 cents a litre for two straight weeks and hit an all-time record high of 119.4 cents a litre on August 19. Charles St-Arnaud, chief economist at Servus Credit Union, told the Edmonton Journal that these widening refinery margins mean refiners’ cuts now account for roughly half of what drivers pay, and those profits do not automatically translate into savings for domestic consumers. Oil futures trader Tim Duggan characterized the market surge to the Edmonton Journal as “Crackageddon.”
All I want for Christmas is a diesel refinery right now
Tim Duggan, Oil futures trader (via Edmonton Journal)
Timing Compounds Pressure on Prairie Farmers and Trucking Fleets
The record-high fuel costs coincide directly with the autumn harvest, when on-farm diesel usage reaches its annual peak. Farmers, operating as price-takers, lack any mechanism to pass the elevated fuel expenses for tractors, combines, and transport trucks on to buyers. In Alberta, producers faced further strain as major crop harvesting reached just 1.1 percent by August 18, lagging significantly behind the historical average of 6.6 percent for that date, according to the Edmonton Journal. Saskatchewan long-haul operators and truck stops similarly reported absorbing unprecedented operational costs, as documented by CTV News Regina.
Consumer Impacts and Retail Outlook
Transportation and logistics sectors are bearing the immediate brunt of the price escalation, but analysts warn the impact will soon reach retail shelves. Dan McTeague, president of Canadians for Affordable Energy, told CP24 that higher diesel costs create a cascading knock-on effect across nearly every product moved by freight. Consumers should expect fuel surcharges to appear in grocery and retail pricing within 30 to 60 days. Richard Masson, a former CEO of the Alberta Petroleum Marketing Commission, told CP24 that there is “no end in sight to this problem,” noting that refinery repairs typically require months to complete.
