Canadian SMEs Face Mounting Pressure from Soaring Energy Costs

When uncertainty hits global markets, supply chains experience disruptions on many fronts. For Canadian small businesses, soaring energy prices trickle down to higher transportation and input costs, among other impacts.

Recent conflicts in Iran and the closure of the Strait of Hormuz choked a critical energy transit. However, small businesses across the country have been clear—governments should prioritize increasing domestic energy production and capacity to better support the economy and ensure entrepreneurs have reliable access to the energy they need to operate¹.

The impacts of high fuel costs on SMEs

A recent survey from CFIB found that most Canadian entrepreneurs are deeply concerned about rising energy costs’ negative and long-term impacts (87%)², citing fuel costs as their business’s biggest challenge in April 2026³. 

While some sectors are being hit harder than others (agriculture and manufacturing), shipping problems are raising input costs for the entire supply chain. Around 1 in 7 small business owners reported being affected by supply and price disruptions for non-fuel goods transiting the Strait of Hormuz⁴.

With less capacity than larger firms, SMEs are particularly vulnerable to global shocks. CFIB data reveals that local entrepreneurs use energy sources differently based on their industry, operations, and location. However, 70% of affected businesses reported absorbing these costs by reducing profits, with many even having to delay or cancel investments⁵. As a result, small businesses’ resilience is reaching a limit due to prolonged disruptions and a reduced workforce.

An opportunity to strengthen Canada’s energy supply amid global uncertainty

To offset some of these pressures, CFIB recently wrote a letter to Prime Minister Mark Carney, asking Ottawa to:

• Improve the country’s energy resilience and affordability by eliminating the industrial carbon tax and enhancing Canada’s current energy infrastructure with quicker project approvals and a stronger integration of east-west energy supplies.
• Provide immediate fuel cost relief, including extending the temporary suspension of federal fuel excise taxes beyond September, working with provinces to suspend their excise tax on fuel, and permanently preventing the “tax-on-tax”—the GST applied to fuel taxes—from being reintroduced.

Also, CFIB's Economist Bradlee Whidden presented in early June at the Energy for a Secure Future's panel discussion, an event on energy security and affordability. He shared that energy policy should be considered from different angles. Since businesses don’t rely on energy sources in the same capacity, a combined approach would help meet the varying energy needs of businesses across the country.

Conclusion

Government must implement policies, green-light projects, and move faster on those already approved so that Canadian SMEs have stable and affordable access to the energy they need to operate and expand their business.

To learn more on how small business owners are impacted by rising energy prices, explore our latest survey and read our research blog.

Footnotes: 

1. CFIB. 2026 Small Businesses Energy Survey. March 5-May 26, 2026. 2,080 responses. 90% of small businesses shared that Canada should move quickly to increase its energy supply to fill potential shortfalls caused by global energy disruptions.
2. Ibid.
3. CFIB, April 2026. Your Voice Survey. 1,611 responses.
4. Ibid.
5. Ibid.