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.