Many Albertans woke up to relief at the pumps Friday.
At 12:01 a.m., the provincial government stopped collecting the 13-cent-per-litre gas tax. The move was announced last month as a way to help consumers with the rising price of gas.
While not all gas stations in Edmonton had dropped their prices first thing Friday morning, several were showing prices of $1.54.6. That’s down from about $1.65 at many stations on Thursday. One gas station at the Edmonton International Airport had gas for $1.52.9 per litre, while another was still at $1.65.9 around 5 a.m.
Stations in Calgary also saw about a 10-cent drop at the pumps. The price at the Mission Co-op gas station, where Premier Jason Kenney held a news conference Friday, was $1.56.9.
The province estimates the removal of the gas tax will translate to a savings of about $6.80 per tank for a 50-litre compact car, $7.21 for a small SUV, $12.65 for a mid-size SUV, $18.50 for a large pickup and $185.50 per tank for a semi-trailer.
Kenney said the savings are a huge tax cut for Albertans that will put “more jingle in their jeans.”
“That’s big money when Albertans need it most,” Kenney said of the gas tax savings.
“We are not going to take more money out of people’s pockets if we don’t need it.”
Dan McTeague, president of Canadians for Affordable Energy, said there is still room for the price at the pumps to go down.
On Friday in Edmonton, McTeague said it’s costing gas stations about $1.38 per litre to buy their fuel.
“Anything above that, less GST, is called a retail margin,” he said. “They’re holding on to a 19-cent retail margin.
“Most gas stations across Canada get by quite well on eight to 10 cents a litre. That allows them to pay their bills, cover the cost of honouring credit cards, paying the electricity, their overhead, etc. Twenty cents a litre, folks, that’s pushing the envelope, that’s stretching it.”
McTeague anticipates another “dramatic drop” in wholesale prices on Saturday, because of the move by U.S. President Joe Biden to release one million barrels of oil per day from the nation’s strategic petroleum reserve in a bid to control energy prices.
“If we continue to see $1.58, $1.59 here in Edmonton, gas prices are going to be picking up what I think is a king’s ransom of 25 cents a litre as a retail margin. That is simply unacceptable,” McTeague said.
“I think gas stations are duty bound to curbing their enthusiasm, as it were, and ensuring that they’re not seen as the ones taking advantage of both consumers and now the public interest.”
Many drivers were relieved as they pulled up to fill their tanks Friday morning.
“It’s much needed, definitely,” said Calgary driver Will Winship. “I do drive a truck but I’ve switched to driving my car just because of the gas prices.”
“It’s good,” said fellow driver James Cameron. “It’s not really a big deal to me because I don’t gas up very often. I just happened to be here this morning. I only gas up every six weeks or so, so it’s not a huge part of my budget but it’s good for other people.”
The Alberta Opposition said the tax relief is not enough to help Albertans with mounting bills.
“I’ve been getting messages from Albertans all morning who aren’t seeing any price relief at their local gas station,” NDP Energy Critic Kathleen Ganley said. “One thing we all know about gas prices is that they move around continuously. We’ll have to wait and see if price dips survive more than a few days.
“Over the past few days, I’ve been asking the UCP how they will ensure that their pause on the gas tax will actually be passed along to Alberta families and not just swallowed up by retailers.”
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 increased 25 per cent, up to a total of $50 per tonne of emissions. At the pumps, that translated to about an extra 2.2 cents per litre of gas, hitting a total of 11 cents per litre.
Kenney has long called on the federal government to halt its planned increase of the federal carbon tax. In a letter to the premiers of Alberta, Saskatchewan and Manitoba dated April 1, Federal Minister of Natural Resources Jonathan Wilkinson said the federal carbon pollution pricing system is working and the Government of Canada will continue to implement its plan.
“The carbon price’s goal is to reduce pollution — not to raise revenues. In jurisdictions where Canada’s pricing system applies, all of the proceeds are returned to the jurisdictions they came from. Temporarily suspending the pollution pricing system would actually deny Canadians of these crucial rebates that they use to make life more affordable.”
Earlier this week, the premier said the province would be watching gas companies “like a hawk” to ensure they were passing the cost savings on to consumers.
Finance Minister Travis Toews doubled down on that Friday.
“There is a very competitive retail market in Alberta for fuel — for gas and diesel — and it was our belief that because of that very competitive market that ultimately, retailers would be passing this tax savings along to consumers and of course we’re seeing that today,” he said.
“We’ll continue to monitor it.”
If retailers aren’t doing as they’re told, Toews said the government will cross that bridge when they come to it.
“I have every reason to believe that in this competitive market, retailers will be in fact passing these savings on,” he said.
“Those who don’t pass on the savings won’t be selling gas, that will be the reality.”
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.