Canada’s “greatest energy crisis of a generation” puts growth and earnings in the crosshairs
Canadians are staring down what one analyst calls “the greatest energy crisis of a generation,” and the shock is already eroding household spending power, squeezing margins and raising the risk of a broader slowdown, particularly in energy‑sensitive sectors.
According to the Financial Post, gas prices in parts of Canada have climbed above $2 a litre, the highest in four years, while US prices topped US$4 a gallon.
Sal Guatieri, senior economist at BMO Capital Markets, told the Post this marked the largest monthly increase in fuel prices on record going back 40 years.
West Texas Intermediate traded at about US$110.64, and the Post reported that most analysts see US$150 oil as a trigger point for an economic downturn or even recession.
Guatieri said crude trades in a global market “no matter what US President Donald Trump says about the US not needing Middle East oil,” so North American prices move with the rest of the world.
He noted that gasoline and other fuels make up 2 percent of personal consumption in the US, meaning persistent increases could force Americans to spend about US$1,000 more a year on fuel instead of other goods and services.
Canadians look more exposed.
Guatieri told the Post that Canadians are likely to feel the pressure of rising energy costs more than Americans because consumer spending is already lagging, disposable incomes are growing more slowly and households carry heavier debt.
At the end of last year Canadians spent 14.6 percent of their disposable income on interest payments, near a record high, versus 11.3 percent for American households, which is below long‑run norms.
Guatieri told the Financial Post that “more money poured down the gas tank” is money higher‑income households would otherwise spend on “vacations, restaurants, and entertainment” and lower‑income earners would use for “food, shelter and clothing.”
He warned that a worst‑case Iran war scenario could trigger a sharp pullback in household spending in both the US and Canada.
On the business side, operators already report rising input costs.
“The first thing (we noticed) is the price of shipping,” said Luke Champion, owner of Toronto cheese shop Good Cheese, which buys product globally and ships across Canada, in an interview with CTV News. “So we are really feeling the pinch on that.”
He told CTV News suppliers have started to raise prices and said he is trying to absorb some of the increases while being “really careful” about what he brings in and looking for products that are “wonderful, but still affordable.”
Affordability pressures pre‑date this conflict.
“Everybody is just feeling that we are being attacked on all fronts all at once,” said Andre Cire, associate professor of production management at the University of Toronto, speaking to CTV News, citing earlier effects from the war in Ukraine and “a lot of volatility.”
According to Dan McTeague at Canadians for Affordable Energy, the average price of a litre of regular gas has risen 51 cents since the war in Iran began on February 28, diesel is up 74 cents and jet fuel has surged $1.05 a litre.
Cire told CTV News that “energy oil is embedded in everything that we have in the modern economy,” from manufacturing and packaging to transportation.
Those cost pressures are feeding directly into pricing.
Air Canada Vacations has started adding a $50 per‑passenger fee on some destinations, WestJet will add a $60 fuel surcharge on bookings made with its Mastercard vouchers, and Porter Airlines and Air Transat have introduced fees on certain routes.
Beginning April 17, Amazon will impose a 3.5 percent surcharge on deliveries for sellers, according to CTV News.
Behind the pump and ticket prices sits a severe supply shock.
BNN Bloomberg reports that McTeague, now a gas analyst and president of Canadians for Affordable Energy, describes the situation as “probably the greatest energy crisis of a generation.”
Jet fuel prices have more than doubled since the war on Iran began, reaching about $1.92 a litre.
The war has disrupted key shipping lanes through the Strait of Hormuz and damaged regional energy infrastructure, with repairs potentially taking months.
McTeague told CTV News there is no spare capacity, warned that Asia and Europe are “in big trouble,” and said “the next domino will fall here, in North America.”
He argued, as reported by BNN Bloomberg, that higher prices are the only tool to conserve global supply and curb demand, and warned they could become “unattainable and uneconomical” for consumers.
McTeague told the outlet that jet fuel and diesel are “the global workhorses when it comes to transportation,” including commercial aviation, military use, air freight and home heating in Atlantic Canada.
He said that if supplies tighten or prices become “unattainable,” Canada faces a major economic slowdown.
BNN Bloomberg noted that Canada produces most of its jet fuel domestically but not enough to export.
The aviation sector already looks fragile.
Aviation lecturer John Gradek of McGill University told BNN Bloomberg he has not seen “this type of impact in aviation in the last 50 years.”
As global fuel supply tightens and prices jump, he warned carriers could cancel flights, issue layoffs and even go bankrupt, and may adjust routes simply to ensure they can refuel.
“It is going to impact summer travel,” Gradek said. “It will be chaos. It will be turmoil.”
Gradek said that domestic services “between points in Canada” should not face supply issues, but he warned that international services to regions with short supply are at risk and that cancellations could begin as soon as mid‑April.
He said flights to Germany, Switzerland, France, Italy and the UK could be spared because of more reliable fuel supply, but recommended that passengers heading to countries with tight supply seek alternative arrangements.
BNN Bloomberg added that Canadian airlines, facing global‑linked prices, have already raised fares and added fuel surcharges.
The macro backdrop is also weakening.
The Financial Post reported that Canada’s trade deficit widened to $5.7bn, its largest since August last year, as imports rose 8.4 percent to a record $72.1bn, driven in part by gold shipments, while exports increased 6.4 percent to $66.3bn, the highest since March 2025.
Canada’s trade surplus with the US shrank to $1.7bn, the smallest since the height of the 2020 pandemic, while trade with non‑US partners hit a record, up more than 10 percent.
Policy‑makers are under pressure to respond.
CTV News reported that Prime Minister Mark Carney, pressed on why some Canadians pay more than $2 a litre for gasoline despite Canada’s vast oil reserves, said “the short answer is because there’s a global market,” where prices in oil‑rich countries rise “alongside with those who don’t have that oil and gas.”
He said that the government is focused on how long the shock will last and “what we can do to help cushion the blow for Canadians.”
In a separate appearance reported by BNN Bloomberg, Carney said he is “looking at” ways to help with high gas prices but did not provide details or a timeline.
Conservative Leader Pierre Poilievre has called for gas taxes to be scrapped for the rest of the year and has sent Carney a formal letter asking him to suspend the federal fuel excise tax and the GST on gas and diesel, and to use what Poilievre described as the government’s “massive windfall” from fuel costs to fund the relief.
