No evidence of gas price gouging since provincial tax removal, Alberta government says

Click to play video: 'Alberta government’s 6-month suspended fuel tax now in effect'
Alberta government’s 6-month suspended fuel tax now in effect
The Alberta government's six-month fuel tax suspension is now in effect, meaning drivers should be paying a lower price at the gas pump. But as Sarah Komadina explains, for many filling up, it doesn’t seem like there is much of a savings. – Jan 2, 2023

In the first few days of the New Year, many Albertans were expecting lower gas prices thanks to the province’s decision to suspend its gas tax. Instead, they were met with prices that averaged about 10 cents higher than they were just over a week ago.

“It’s very confusing because one day it’s $1.05 at Costco and the next day it’s $1.35. I know that there’s an awful lot of profit-taking, from what I understand with energy companies,” one Albertan told Global News while fueling up.

“It doesn’t seem like there’s anyone out there that can really put their finger on it.”

“It’s terrible … I think something should be done a little bit more,” said another.

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However, the UCP government said there isn’t any sign that retailers are fixing prices so they can pocket the extra few cents per litre.

Dale Nally, Minister for Red Tape Reduction, said the ministry’s Consumer Investigations Unit is monitoring gas prices at stations across the province to see if there is price gouging.

“So far, we have found that prices at local stations are in line with current market conditions,” he said.

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Nally said businesses found guilty of price gouging can be fined up to $300,000 or receive up to two years of jail time.

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Trevor Tombe, a professor of economics at the University of Calgary, doesn’t think gas stations are fixing prices.

“I can appreciate that some people saw the gas tax eliminated yesterday and yet their local stations saw prices increase. But it is important to remember lots of things affect prices and those things happen at the same time,” said Tombe.

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He said the remaining 4.5 cents eliminated by the province is equal to a regular fluctuation one would see on a normal day “in a particularly volatile market like oil prices.”

“The evidence is crystal clear that last year the provincial gas tax suspension was basically fully passed on to consumers … I think there’s every reason to think this 4.5 cent reduction will also be fully passed through to consumers.

However, Tombe said that doesn’t necessarily mean that prices are going to be lower in January than they were in December because other factors might contribute to increases.

“For example, for the last couple of months we’ve seen margins both in terms of refineries and in terms of the retail stations fall quite a bit, so a big reason why the prices fell between November and December were those shrinking margins,” he said.

Tombe said in the last few days, refinery margins have started to rise a little bit as well but not outside the historical normal for the amount of ups and downs that we see in that part of the market.

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“I know that people like to point fingers at corporations and the default presumption by many is that they’re always trying to gouge consumers but when there are easily accessible alternatives, competitive retailers that you can switch your business to, it’s very hard for any particular station to increase prices,” he said.

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