FACT CHECK: Are Lower Gas Prices The Result of Government “Eliminating The Carbon Tax in Ontario”?
FALSE. Ontario never had a carbon tax; it operated under a cap-and-trade system that ended last year. What's more, the price of gasoline is primarily driven by wholesale oil prices, not provincial intervention—and it has been relatively low across Canada recently.
In late December, a number of Progressive Conservative MPPs tweeted about lower gas prices across Ontario—nearly seventeen cents lower per litre compared to December 2017. Of note, on social media, both Premier Doug Ford and Christine Elliott, the Deputy Premier of Ontario and Minister of Health and Long-term Care, attributed the lower prices to “eliminating the carbon tax in Ontario.”
The fact that Ontario had a carbon tax is false. The province used to manage carbon emissions through a cap-and-trade system, not a carbon tax; that system was scrapped by the Conservative government last year.
As the Center For Climate and Energy Solutions explains, a cap-and-trade system and a carbon tax are “two distinct policies” aimed at reducing greenhouse gas emissions. The Ontario cap-and-trade program placed a limit on the amount of pollution certain companies, such as electricity importers, natural gas distributors, or fuel suppliers, could emit. If their limit was reached, companies could buy more allowances from other companies who hadn’t reached theirs (hence “cap” and “trade”). A carbon tax, on the other hand, puts a government-determined price on each ton of carbon emitted by a company, which is then translated into a tax on different utilities, including electricity, natural gas, or oil. (We wrote about provincial emissions program in more detail back in October.)
To claim that gas prices have fallen solely because of the elimination of this cap-and-trade system in Ontario is also false. As shown in this map generated by GasBuddy, an online aggregator of gas prices, gas prices have been relatively low in much of the country in the past few weeks due to plunging oil prices worldwide.
As reported by the CBC, the price of local gas is directly affected by the wholesale price of oil, so global factors such as geopolitical upheaval and economic troubles all contribute to volatile pricing. The elimination of the cap-and-trade system may have had a small effect on reducing gas prices in Ontario, but the recent decrease in prices is largely due to global market forces.