this post was submitted on 23 Mar 2025
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Fossil fuels are hurting affordability, not helping it (rabble.ca)
submitted 4 days ago by [email protected] to c/[email protected]
12 comments fedilink hide all child comments
 

A forensic analysis of Statistics Canada data on the composition of recent inflation confirms that fossil fuels haven’t protected Canadians from affordability problems. In fact, fossil fuels were the biggest single cause of those problems.

The 2022 spike in global oil prices, channeled immediately into higher prices for fossil fuel products sold in Canada, was by far the biggest single factor setting off post-pandemic inflation. From January 2021 through June 2022 (when inflation peaked), consumer prices for fossil fuels grew 81 per cent. Prices for fossil fuels used as inputs by businesses grew even more, by 127 per cent.

The direct costs of higher fossil fuels caused almost half of all consumer price inflation in that time—and more than half of inflation over the Bank of Canada’s two per cent target. Add in the indirect costs faced by businesses in other industries (from agriculture to transportation to construction) for their fossil fuel purchases, all passed on to consumers, and the dominant role of fossil fuels in the inflationary surge is clear.

This will be shocking news to Canadians who blamed the carbon tax, or immigrants, or Justin Trudeau personally, for inflation and affordability challenges after the pandemic. It’s no accident that vested interests—from the oil industry to the Conservative Party—have tried to divert Canadians’ righteous anger toward those scapegoats. They don’t want us to know where the true problem originated.

Since that price spike did not reflect fundamental economic factors (like supply and demand, or cost of production), it fed directly into the profits of petroleum corporations around the world—including in Canada. Canadian oil and gas operating profits grew by $151 billion (compared to 2019 levels) from 2022 through 2024.

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[–] [email protected] 10 points 4 days ago

wait wait wait - you're saying the industry most associated with destroying all life on the planet, in the full knowledge of doing so, is also making prices rise??

Fun fact: free energy isn't being researched because it would destroy global economics. . . among, other reasons.

[–] [email protected] 8 points 4 days ago* (last edited 4 days ago) (3 children)

Fossil fuel prices in Canada can be decoupled from the global market if we really wanted to. We'd have to move to full domestic supply from extraction through refining to the pump. Then regulate the price in a supply management style. If we did that we wouldn't have to be subject to price shocks caused by OPEC reducing supply, or remote wars breaking out.

Then obviously reducing consumption makes the whole problem smaller. But I don't know if we can resolve enough by reducing consumption alone.

[–] [email protected] 6 points 4 days ago (2 children)

I'm curious how the cost of that would compare to decarbonization.

[–] [email protected] 10 points 4 days ago

Long term? Much higher.

Electrification is the way forward no matter what, it's completely ridiculous to suggest investment in fossil fuel at the moment.

[–] [email protected] 2 points 4 days ago* (last edited 4 days ago) (1 children)

No idea. I'm not suggesting this as an alternative to decarbonization. I'm thinking of the wide socioeconomic costs that the recent inflation shock produced in Canada and abroad. Such crises are often used by political opportunists and large capital to usurp power and introduce more neoliberal policy favouring capital over labour. And capital in Canada still really likes fossil fuels. So from that perspective, I'd like to get a hold of this even if it costs more on an ongoing basis. At the same time do massive investments into electrification. If we don't control the domestic price of fossil fuels, price shocks put decarbonization policies on the chopping block. Just look at what happened to the carbon tax during the last shock.

[–] [email protected] 2 points 4 days ago

Such crises are often used by political opportunists and large capital to usurp power and introduce more neoliberal policy favouring capital over labour.

Yes, because the current oil & gas industry is full of organized labour and Alberta is a socialist utopia! /s

[–] [email protected] 5 points 4 days ago (1 children)

This take is completely nonsensical.

Fossil fuel prices in Canada can be decoupled from the global market if we really wanted to. We’d have to move to full domestic supply from extraction through refining to the pump. Then regulate the price in a supply management style. If we did that we wouldn’t have to be subject to price shocks caused by OPEC reducing supply, or remote wars breaking out.

At MUCH higher average costs, either directly or through government subsidies. There's a few reasons we don't have domestic processing, one of which is it doesn't make economic sense.

Then obviously reducing consumption makes the whole problem smaller. But I don’t know if we can resolve enough by reducing consumption alone.

Then one way or another, we pay the price, either collectively or individually. I don't know why we'd incentivize the decision to use fossil fuels, given not only their environmental impact, but also their high economic cost compared to other energy sources. Yes, there are exceptions where switching isn't possible (yet), but that's why we have exceptions/programs such as farm fuel (usually dyed red), the carbon-tax had a rural supplement, etc.

[–] [email protected] 2 points 4 days ago* (last edited 4 days ago) (1 children)

I don't doubt it's uneconomical in a free market sense. When you're thinking of the costs of decoupling domestic fuel prices from the global market, are you also considering the costs of inflation during global price shocks? And I don't mean just the pure economic costs of inflation, I also mean the downstream political and stability costs, such as disruption of decarbonization policy.

[–] [email protected] 1 points 4 days ago (1 children)

If it doesn't make economical sense, then by definition, you're providing subsidies. Especially when you talk about infrastructure that's supposed to be amortized over decades-and-decades, yet we are aiming to be almost free of fossil fuels in the next 5 years, and net zero in 25 years. So I really question why you'd want to subsidize Canadian consumers and businesses from "global price shocks"? That's a stick to encourage Canadians to pursue energy independence through electrification, etc.

[–] [email protected] 1 points 4 days ago

I explained why. People will not bear the stick and instead beat you with it by electing fossil fuel funded governments that kill decarbonization policies. Policies and governments that ignore people's material conditions do not last long in a democratic system. I don't like where people currently are, commuting with F150s in the GTA, but that's the reality. It's alright if you don't buy that but I don't think my argument is devoid of reason.

[–] [email protected] 2 points 4 days ago (1 children)

Fossil fuel prices in Canada can be decoupled from the global market if we really wanted to. We'd have to move to full domestic supply from extraction through refining to the pump.

That would mitigate some of the effects, but it wouldn't be enough to completely decouple. So long as pipelines, shipping terminals, and import/export policies expose Canadian fossil fuels to the global market, Canadians are going to be affected at the pump.

[–] [email protected] 1 points 3 days ago* (last edited 3 days ago)

While I think canada should keep selling oil to the world, I don't think we should be using it domestically. Strong investment in public transportation, electric micro-mobility, and electrified rail.

"If the world wants pild it should be Canadian oil" sure, I'm not against this sentiment. But remember, "don't get high on your own supply"

All that to say, the best way to decouple from global supply is to reduce national demand.