Premier Jason Kenney says his government will be watching gas station owners “like a hawk” as tax savings at the pumps are set to begin on Friday.
At 12:01 a.m. Friday, the Alberta government will stop collecting the provincial fuel tax. The 13-cent-per-litre break at the pumps was announced earlier this month as a way to help consumers with soaring gas prices.
On Wednesday afternoon, the premier said the government sent a clear message to gas retailers to ensure they pass on the savings to drivers.
“We will be informally auditing that. The department of finance will be closely tracking the actual price at the pumps. But look, I think what we’ll do is benchmark this against where the prices are in the rest of Canada,” Kenney said.
“We won’t accept any games being played with this. If they don’t pass on these tax savings, if they try to pocket a portion of that, we will be prepared to resort to using legal tools to protect consumers, and we’re open to potentially bringing in regulatory power to compel retailers to pass on that savings,” Kenney stressed. “We’ll be watching like a hawk.
“I would just say this, though, most of those gas retailers out there, they’re mom and pop businesses, they’re family owned retailers and I think they want to be good local businesses and pass on the savings to their customers in their neighbourhoods and there’s also competitive pressure.”
The timing of the gas tax savings for Alberta drivers coincides with an increase to the federal carbon tax. Also Friday, the federal carbon tax will increase 25 per cent, up to a total of $50 per tonne of emissions. At the pump, the feds estimate that works out to an extra 2.2 cents per litre of gas, hitting a total of 11 cents per litre.
Kenney anticipates Alberta drivers should see about a 10-cent-per-litre drop in gas prices on Friday.
“I would love for it to be a 13-cent cut on April 1. Unfortunately, Justin Trudeau’s 25 per cent hike in the Liberal/NDP carbon tax means that the 13-cent reduction in the Alberta fuel tax won’t be seen fully,” Kenney said.
“We do have, fortunately, the lowest gas prices in Canada. In many parts of Alberta we’re at just slightly over $1.60 a litre. That should go to slightly over $1.50 a litre on Friday.”
Kenney has long called on the federal government to halt its planned increase to the carbon tax. Earlier this week, the province introduced a motion to urge the Liberal government to halt the plan.
Moshe Lander, an economics professor at Concordia University of Montreal and Alberta resident, said he’s not entirely convinced Albertans will see the 10-cent drop first thing Friday.
“The belief is that there’s collusion among the gas companies and that’s just not true,” he explained. “However, you can have a ‘wink-wink’ agreement that it’s in no gas company’s interest to lower the prices tomorrow. You can pocket the difference.
“That agreement would hold on a simple level as, ‘I’m not planning on lowering mine, unless I see you lower yours. And if I see you lower yours, then you leave me no choice but I’m going to have to lower mine.’
“So it’s almost like a game that they can be playing with each other.”
Lander believes gas companies will take more of a wait-and-see approach.
“Whoever is going to be that one that moves first is going to hope that they’re going to be able to capitalize on lineups of drivers wanting to fill up their SUVs from dead empty to full to capitalize on that first-mover advantage,” he said.
“The fact is the other gas companies would move so quickly that that advantage would end up disappearing quickly.”
The Alberta gas tax will be removed on a sliding scale. When WTI oil is over US$90 per barrel, the tax will be removed. When the price is less than US$80 per barrel, the tax will be in full effect. The price of oil sat at about US$105 per barrel Thursday morning.
The initiative will be put in place for the entirety of the 2022-23 fiscal year, but will be reassessed on July 1 and every quarter after that, Kenney said. It will also be looked at again before the government’s next budget.