What does my high-school buddy’s Pontiac Firebird have to do with your oil furnace?
Fuel is so expensive, and they both burn so much of it, that a fill up requires careful planning.
A Firebird with a throaty five-litre V8 engine has approximately the same fuel burn rate as a F-15E Strike Eagle. As a result, my buddy planned his Friday nights with the same precision as a mission planner at Fairbanks’ Eielson Air Force Base.
The crew was a driver, a co-pilot riding shotgun and two small friends in the tiny back seats. You needed enough fuel for the mission: FH Collins parking lot to KFC for fries and gravy, some aimless cruising before the show at Yukon Cinema, then a legendary Hot Christie sandwich pickup, and a possibly lengthy party-search mission from Crestview to Riverdale to the usual bush-party locales.
Since a full tank was only economically feasible if someone on board had recently hit the overtime jackpot at work, our pilot needed to know when he could get by with just half a tank.
Which brings us to today and the global fuel crisis. Another friend recently told me that he got a call from his home-heating-fuel provider. They were calling to tell him and his credit card to brace for impact. They also offered, like my pal with the Firebird, to just do a half fill-up if cash flow was an issue.
Say you have a thousand-litre fuel tank connected to your furnace. You might need a couple fill ups over the winter, but even just the first one is turning into a shocker.
My friend’s fuel company quoted him $2.53 per litre, or a credit-limit-stretching $2530 per tank. This is up substantially from the Yukon Statistics Bureau average for July of $1.94 per litre. On a thousand litres, that’s an extra $589.
Ouch.
Compared to January 2022, a date we’ll come back to, filling your tank will cost you an extra $1047.
Double ouch.
Teenagers reading this should prepare for sweaters at Christmas and parental shouting about lowering the thermostat.
Sometimes people will blame this on faceless forces, like geopolitics or the global oil market.
However, in this case the problem was caused by humans. And two humans in particular.
In February, 2022, just after it cost a mere $1483 to fill your tank, President Putin launched Russia’s full-scale invasion of Ukraine. This immediately caused Brent oil prices to spike from around $80 (U.S.) to over $120 (U.S.) per barrel, with diesel prices surging shortly afterwards.
But this wore off. By Year 3 of the war, Brent oil was trading as low as $60 (U.S.). Importantly, Russia was one of the biggest diesel refiners in the world and, despite sanctions, kept exporting large amounts of your 18-wheeler’s favourite fuel.
Sorry to bring chemistry into this, but it’s important for your furnace. Diesel and home-heating fuel are so similar physically that impacts on the global diesel market quickly affect your furnace.
Things changed in 2026. Ukraine developed increasingly long-range drones and began pounding Russian refineries. The Financial Times reports that Ukraine has struck 28 of Russia’s 32 large refineries. The four that haven’t been hit are in the bit of SIberia closest to us.
The FT says Russia’s diesel production is probably down about 30 percent. Russia announced an export ban on diesel on July 8.
But this is one, but a relatively small, part of the story.
The big news in 2026 was the Middle East war, launched by President Trump with strikes on Iran on February 28.
Iran responded by closing the Strait of Hormuz, cutting off refined diesel shipments from Gulf refineries to global markets.
Reuters reported in March that an estimated 5-12 percent of global diesel needs depended on the Strait of Hormuz.
In effect, as the FT and others have noted, we are facing a general oil crisis but more specifically a fuel crisis.
While Brent oil has only recently spiked above $100 (U.S.), the cost for diesel in many parts of the world has already surpassed the equivalent of $200 (U.S.) per barrel.
And even though our diesel and your home-heating fuel come physically from the same Alaskan wells or Albertan oil sands mines as before, those producers can also sell on the high global markets. As a result, we have to pay global prices.
If wild talk in Washington, DC, of a ban on US diesel exports turns into reality, you can expect global (and therefore Canadian) diesel prices to spike even higher.
So, what should you do? It depends on which scenario you think we’ll end up in.
You can do nothing, if you think the Ukraine and Middle East wars will be resolved shortly and not replaced by the next geopolitical crisis. There are analysts out there who think that, after these wars are resolved, oil might get very cheap.
Or you could switch your heating, if you have the money for a new system. Electricity here is expensive, but regulated and therefore somewhat buffered from global commodity prices. Propane for heat, believe it or not, is actually cheaper than it was in 2022 according to the Yukon Statistics Bureau’s monthly fuel reports. Canada produces large amounts of propane and the infrastructure to export it to global markets is still being built, so there is abundant and relatively cheap propane here in Canada.
One strategy that pays off in all scenarios involves lower thermostats and more insulation; say Halo Exterra foam board for your house and a thick new fleece for each of your family members.
In the meantime, I’m afraid you’ve got the furnace that’s currently sitting in your basement. If your fuel company hasn’t phoned yet, it may be time to have a Firebird economics conversation with the crew in your house about your incoming heating bill.
—Keith Halliday is a Yukon economist and a winner of the Canadian Community Newspaper Award for Outstanding Columnist. The audiobook version of his most recent book Moonshadows, a Yukon-noir thriller, has just been released.