Oct 3, 2026
Filling a diesel tank has never cost more.
The average retail price of diesel topped $2.64 per litre at the end of September, according to Natural Resources Canada (NRCan), the federal department that tracks fuel prices. That’s up 59% from just before the Iran war and 15% above the previous record set in November 2022.
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Relatively few Canadians drive diesel vehicles — just 2.7% of light-duty vehicles on Canadian roads were diesel-powered in 2024, according to Statistics Canada. But diesel powers most of the medium- and heavy-duty trucks that move food and goods, so its price shows up in almost everyone’s budget.
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According to Mike Millian, president of the Private Motor Truck Council of Canada, a round-trip semi haul between Montreal and Toronto that cost roughly $850 on Jan. 1 now runs about $1,400 — a 65% increase in just nine months.
Persistent fuel costs are now prompting the duelling federal parties — the Liberals and the Conservatives — to offer Canadians plans that promised relief. Here’s what each plan would actually knock off a litre of diesel, and how Canadians can capture these promised savings.
What does Carney’s fuel tax plan save you?
On Sept. 2, the Department of Finance extended the suspension of the federal fuel excise tax until Jan. 31, 2027. The pause, which started April 20, removes $0.04 per litre from diesel and $0.10 per litre from gasoline.
Between Feb. 1 to March 31, 2027, the relief starts to phase out by bringing the diesel excise tax back to $0.02 per litre. Then, on April 1, 2027, the full $0.04 per litre is back.
What does this mean for savings? For every 100 litres of diesel, that’s $4 in savings until the end of January 2027 and $2 in February and March.
This excise tax relief means real savings, but the amount back is small compared to fuel prices surges. According to CBC News, diesel is now more than a dollar per litre higher than a year ago — making a $0.04 tax break seem paltry in comparison.
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What would Poilievre’s plan save you?
On Sept. 27, Conservative Leader Pierre Poilievre proposed eliminating all federal tax on diesel sales until July 1, 2027, at least.
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Poilievre would do this by extending the full excise tax suspension to Canada Day 2027, and removing the goods and services tax (GST) from fuel purchases.
While the excise tax suspension is similar — albeit bigger — than what the Liberals propose, the real savings is the temporary removal of the GST.
At $2.64 per litre, the 5% GST accounts for roughly $0.13 of the pump price. Compared with Ottawa’s plan, that means additional savings per 100 litres of about:
- $13 now until Jan. 31
- $15 in February and March
- $17 from April 1 to July 1
Poilievre is also calling to permanently scrap the federal industrial carbon tax and the Clean Fuel Standard, and to exempt refineries from the federal impact assessment process.
His goal, according to The Globe and Mail, is to close the roughly 32-cent-per-litre gap between Canadian and U.S. diesel prices within five years.
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But before Canadians go the pump — or cash register — expecting savings, there are three factors to keep in mind:
- This is an Official Opposition proposal, not law
- It doesn’t touch provincial fuel taxes
- It’s not yet clear how removing the GST would work in provinces that charge the blended harmonized sales tax (HST), including Ontario and the Atlantic provinces
Will you actually see the savings at the pump?
Could these temporary tax breaks help? Yes. Based on recent history, tax cuts can flow quickly through the supply chain with a positive impact on consumers. For instance, when the excise pause began in April 2026, gas prices fell $0.11 per litre on the first day, according to Finance Canada.
But even tax relief can’t outrun global supply. The effective closure of the Strait of Hormuz has cut energy output for seven months, and experts expect diesel demand to climb further as winter approaches.
And the Canadians that benefit the most depends on how you file taxes. Businesses registered for the GST, including many truckers, farmers and contractors, generally already recover the GST they pay on fuel through input tax credits (ITCs) from the Canada Revenue Agency (CRA). For them, a GST cut mostly helps cash flow — so no new money, but it is money they can reallocate immediately. The excise tax pause, by contrast, lowers their costs directly. For households and small unregistered operators, the most meaningful relief would come from the GST cut proposed by Poilievre.
What to do now and going into 2027
- Budget for April 1, 2027: Under the current law, diesel excise tax climbs back to $0.04 a litre by spring. Build that into your fuel budget now.
- Track weekly prices: NRCan publishes average retail fuel prices by city, so you can see whether relief is showing up where you live.
- Watch your grocery bill: Freight railway fuel surcharges for October are up to 73% above early-August levels. Those costs will eventually reach store shelves.
- Keep every fuel receipt if you’re self-employed: You’ll need them to claim ITCs and business vehicle expenses.
- Don’t plan around a proposal: The Conservative plan would need the government to adopt it.
For most Canadians, either plan trims pennies off a price that has jumped by dollars — for reasons far behind the control of Canadian political parties. The more useful move is treating today’s relief as a temporary buffer and setting a fuel and grocery budget that still works when it ends.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
