Supply Chain Should Brace For Carbon-Based Fuel Price Spike

This New Year will usher in a new carbon pricing policy in Ontario, setting the stage for diesel price increases of up to five cents a litre over the current average wholesale rack price for 2016, the Ontario Trucking Association advises.

The anticipated price increase slated to take effect Jan. 1 would be consistent with the impact of carbon pricing on diesel prices in Quebec and with forecasts previously made by Premier Wynne.

“Fuel is a trucking company’s second largest cost,” says OTA president Stephen Laskowski. “Supply chain systems are in place to capture such increases. However, this is a unique circumstance in that fuel will rise only in a specific region. Users of trucking services in Ontario should be prepared to see the cost of fuel to transport their goods rise rapidly in the New Year.”

Meanwhile, as a result of current and impeding volatility of the fuel market, OTA reiterated its support for a province-wide review.

The Government of Ontario, through the Ontario Energy Board, recently announced it will launch a review of the provincial transportation fuel market, including gasoline and diesel. This review is primarily in response to growing concerns over the variation of prices at the pump, especially in northern Ontario.

The stated focus of the review will be on providing more information about how gasoline and diesel retail prices are set, concentrating on:

  • The extent and causes of retail gasoline/diesel price variations over time and between regions within Ontario
  • How Ontario compares with pricing and markets in other jurisdictions
  • The information available to consumers about pricing and price variations

While the main focus will be on how this affects consumers paying retail price for fuel at the pump, it also presents OTA an opportunity to provide comments. Full details of the Ontario Energy Board Review are included in the attached PDF: transportation-fuels-market-review_public

OTA members wishing to provide comments with the provincial government can so by forwarding comments to operations& by December 5. The comments will then be consolidated and forwarded to the Ontario Energy Board.

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