Carbon tax and heating oil prices

Do you live in Quebec and have questions about government measures regarding energy and the environment? Are you heating with heating oil and would you like to know how the price is set? Would you like to know more about the carbon tax? Discover the answers to your questions in this article!

What is the carbon tax?

The carbon tax, introduced by the federal government in 2018, imposes a price on carbon emissions, in order to encourage businesses and consumers to reduce their consumption of fossil fuels and opt for cleaner and more sustainable alternatives. It applies to several sectors, including fuels, heating and electricity production. Thus, this tax has an influence on the cost of heating oil.

Revenues generated by the carbon tax are reinvested in initiatives to combat climate change, such as financing renewable energy, energy efficiency and sustainable transport projects, as well as in compensation programs for households to low income in order to mitigate the economic impacts of the tax.

In Quebec, the federal carbon tax does not apply, because the province has its own program and carbon pricing is considered sufficient. In fact, the Quebec government issues an emissions cap each year. This measure is an integral part of the Green Economy Plan implemented by the provincial government. Thus, the carbon tax does not affect the price of heating oil in Quebec. For the other Canadian provinces, a suspension was implemented in October 2023 for a period of 3 years on carbon pricing of oil heating.

Heating oil: how is its price set?

In 2024, in Quebec, the price of heating oil is influenced by various factors, including seasonal demand, weather conditions, production and distribution costs, fluctuations in supply, demand and prices of crude oil on the global market, as well as government policies on energy, taxation and the environment.

So for many years, the price of fuel oil has experienced greater or lesser variations from month to month. For example in Montreal, in January 2013, it was 131 cents per liter rising to 144 in April 2014, then dropping to 102.3 in January 2015 and to 97.7 in March 2016. The cost of fuel oil rose to 142.7 in May 2018, then it fluctuates between 138 and 120 cents per liter between June 2018 and March 2020. The price collapsed in April 2020 to 85.5 cents/l due to the pandemic, its lowest rate in the last 10 years. Then it rises and varies to reach a peak in June 2022 at 216.5 cents/l. It comes back down and fluctuates, reaching 158.2 c/l in December 2023.

Would you like precise information on heating oil prices in your area?

To find out everything about heating oil, including its price, contact the specialists at Petrole & Propane Bélanger. They will be happy to give you the price of today’s fuel oil as well as advice on the various types of petroleum products. Indeed, this renowned and recognized 100% Quebec family business works in the field of delivery of propane gas and petroleum products in the great Montreal for over 60 years.

Source :
Statistics Canada. Table: 18-10-0001-01 (formerly CANSIM 326-0009) Monthly average retail prices for gasoline and fuel oil, by geography.