Canadians are paying much attention to the record cost of regular gasoline, but the price for another fuel should also be raising eyebrows, experts say.
Diesel prices are soaring higher than gas, averaging $2.22 a litre on Monday, according to GasBuddy.com. In comparison, regular gas averaged around $1.89 per litre in the country.
Diesel drivers have no doubt been impacted, but that doesn’t mean every other Canadian should disregard its record price at the pumps, said Patrick De Haan, head of petroleum analysis at GasBuddy.com.
“Diesel is really the fuel that powers the economy: semi-trucks, trains, ships in some instances, are all using diesel,” he told Global News.
“This is going to be something that will affect you at the grocery store, at the hardware store, clothing store, electronic store, etc. This is something that will very much become an economic pinch point with the higher cost of fuel to get all of these various goods to the market.”
GasBuddy.com data for May 9 shows the average price for diesel a litre in Canada. Diesel is likely to impact all Canadians, even those who don’t drive, experts say.
Global News Graphic
At this time last year, diesel prices averaged under $1.45 per litre throughout Canada, Statistics Canada data shows. In March 2022, diesel price averages were either near or above $2 a litre in parts of the country. Average prices for April and May were not yet available.
On Monday, the only province that had diesel under $2 a litre in Canada was Alberta, with prices averaging around $1.87 per litre, according to GasBuddy.com.
In Ontario, diesel averaged $2.33 a litre, while Quebec saw prices round out at $2.46 per litre. The highest price for diesel fuel in Canada was in Newfoundland: $2.74 a litre.
“They’re absolutely astronomical,” said Roger McKnight, chief petroleum analyst at En-Pro International Inc., on current diesel prices.
“They’re higher than premium gasoline, which is completely unheard of.”
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Why is diesel so expensive?
Diesel demand has increased as the economy reopens from COVID-19 shutdowns, De Haan said, and oil producers haven’t been able to keep up.
It’s a similar story with gas prices, which have shot up due not only to demand, but also to the impact of the invasion of Ukraine by Russia, a major oil producer that many western nations have punished economically for launching the war on Feb. 24.
But also, several refineries have closed down over the years, resulting in less diesel supply on the market, added De Haan. He cited as an example a Come By Chance refinery in Newfoundland that scaled down operations in 2020. It was bought by a Texas-based equity firm in November with plans to produce renewable diesel and sustainable aviation fuel beginning this year.
“Not only that, but diesel is also competing in a way with jet fuel. Jet fuel, diesel and heating oil are essentially all products that come from the middle of a barrel of oil,” he said.
“They’re similar in ways and they’re different, but they all compete with each other. So, as more planes are taking to the sky, there may be more jet fuel demand and the refinery may produce more jet fuel at the cost of diesel.”
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Every Canadian will be impacted by the high cost of diesel, not just those who own diesel vehicles, said Dimitry Anastakis, a professor at the Rotman School of Management.
Last year, 65,881 new diesel vehicles were registered in Canada, compared with 79,330 hybrid-electric cars and 1,415,361 gasoline vehicles, Statistics Canada data shows.
However, those groceries you just bought at the store that went up in price? They were likely brought there on a diesel-powered truck, Anastakis said.
“Prices are going up not just in terms of the end-use product, but in terms of the transportation system that’s there,” he said.
“In order to keep up with inflation, it’s kind of a vicious cycle, retailers are raising prices and therefore suppliers are raising prices and transportation companies are raising prices, too.”
Diesel fuel is one of the largest costs for transportation operators, said Jean-Marc Picard, executive director of the Atlantic Provinces Trucking Association.
“If this lasts for another few months, we’re certainly going to see the cost of certain goods go up,” he told Global News last month.
“It’s the highest cost in freight, and everything moves by freight.”
Will diesel prices go back down?
Diesel historically cost Canadians less than regular gas at the pumps, but the move to higher prices as inflation rises shows we’re entering a “really volatile period,” Anastakis said.
“Things are going to be up and down and they’re going to be up in terms of costs, and down in terms of what you get for those costs,” he said.
“So this is, unfortunately, a new shared reality of a lot of volatility around these kinds of issues.”
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When it comes to solutions, there’s not much governments can do as oil is a global commodity in worldwide demand, Anastakis added.
“The prices are set elsewhere and they’re global. There are local variations, they are regional variations. But by and large, oil and gas is the one global commodity where there isn’t much leeway in terms of what goes on,” he said.
“Outside of cutting some taxes and offering consumers rebates, … there is not a lot of leeway.”
But, cutting taxes could backfire and result in increased demand, McKnight said. Aside from companies increasing oil production, “demand destruction” could be a way to drop prices, he added.
“If you don’t need as much gasoline or don’t need as much diesel because you’re not consuming as much, prices will come down,” McKnight said.
— with files from Global News’ Travis Fortnum and The Canadian Press
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
