Gasoline prices in Portage la Prairie recently dropped to $1.36 per litre, leaving many residents puzzled after hearing reports of fuel selling for as low as $1.16 in cities like Winnipeg and Brandon. The drop follows the federal government’s temporary pause on the consumer carbon tax—a move that's created both relief and confusion across Manitoba.
Dan McTeague, president of Canadians for Affordable Energy, explains that although the carbon tax has been removed for now, it's likely to return in a different form depending on the outcome of the next federal election. He knows his business, seeing as he was with the Liberal Party of Canada for 18 years as Member of Parliament for the Ontario riding of Pickering—Scarborough East, and was a gas analyst since 2015.
“It's cut for the time being,” he says, “it will be reimposed, obviously, as industrial carbon tax sometime.”
Wholesale costs set the baseline
McTeague outlines that the wholesale cost of fuel across Manitoba currently sits around $1.30 per litre—taxes included—before gas stations even factor in retail margins.
“No one in Manitoba can be selling gasoline for under $1.30 unless they’ve got a rich uncle or a very generous bank,” he adds.
Stations that do offer significantly lower prices are likely operating at a loss or receiving supplier support. In some cases, Indigenous-owned stations may benefit from GST exemptions, shaving an additional six cents off their price.
The math behind the pump
McTeague breaks down the cost components behind every litre sold in the province. Wholesale pricing starts at around $1.02, followed by a federal excise tax of 10 cents, a 14-cent provincial tax, and GST. That adds up to more than $1.30 per litre—before transportation costs are included.
“So if you’re seeing $1.16, someone is taking an absolute beating,” McTeague notes.
He points out that gas stations also incur operational expenses including electricity, staffing, credit card fees, and loyalty program discounts. Most rely on retail margins of just a few cents per litre.
Fuel wars and retail tactics
Some city stations engage in aggressive pricing tactics to stay competitive, temporarily slashing prices after meeting daily sales targets.
“They’ll start off with $1.38 in the morning and drop it $0.15 a litre by after 7:00 in the evening,” McTeague says.
Such tactics might remind some of the "gas wars" of the 1970s and 1980s. But McTeague warns that consistently low prices below wholesale replacement cost aren't sustainable long-term.
Diesel drops even more than gas
The recent tax pause had an even more dramatic effect on diesel, which fell by 24 cents per litre. McTeague explains that’s because diesel had been subject to an even higher carbon tax rate compared to gasoline.
“That’s the global workhorse,” he says. “It’s the stuff you use for transporting goods and services across the country.”
He calculates that truck drivers filling two 500-litre tanks could save $230 in a single stop under the current conditions.
Why this matters to the economy
McTeague stresses that the drop in fuel prices—if sustained—could significantly reduce inflation by lowering transportation and production costs across sectors.
“Energy prices going through the roof with all of these green climate policies… it became a matter of time before the price of everything went up,” he continues.
He argues that the affordability crisis seen across Canada was largely driven by energy policies that failed to account for economic realities.
What about the ‘hidden’ carbon taxes?
Even with the consumer carbon tax paused, McTeague reveals that Canadians are still paying two hidden carbon taxes: an industrial tax called the Output-Based Pricing System and a separate Clean Fuel Regulation. The latter has already driven ethanol requirements from 5 to 15 per cent, and the associated carbon credits are costing refiners—and ultimately consumers—several cents per litre.
“There’s very much a hidden carbon tax,” he says. “Every time you’re buying that $1.16 or that $1.30 or that $1.38, four cents of that is already on the second carbon tax.”
Looking ahead to election consequences
As political parties square off over carbon pricing policies, McTeague sees a clear divide.
“There’s only one party I know that’s saying they’ll scrap it. That’s the Conservative party,” he says. “There’s only one party I know that’s going to reintroduce it slightly as another form of carbon tax.”
He notes he believes that that an industrial carbon tax reintroduced under another name will still drive prices.