Gas prices soar ahead of Alberta gas tax, federal carbon tax increases | Globalnews.ca
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Less than a week before an increase in the provincial gas tax, prices are soaring in many Alberta cities.
In Edmonton, some gas stations raised prices to 151.9 on Tuesday.
“What we’re seeing … is very seasonal in nature,” said Patrick De Haan, head of petroleum analysis at Gas Buddy. “Canadians (are) starting to get out more and more, demand for gasoline is going up across much of North America. Refineries are also transitioning to cleaner, more expensive blends of gasoline that are required for the summer driving season.
“Lastly … refinery maintenance is also happening. Refineries generally do maintenance before the summer driving season to make sure they’re able to crank up enough gasoline,” De Haan explained.
“All three of those things — demand, refinery maintenance and the transition to summer gasoline — generally push prices up almost every February, a trend that can last through April and May.”
What gas stations pay for gasoline can vary too, De Haan said.
“The wholesale price of fuel can go up several cents a litre depending on what day a station is buying. Generally, stations may buy every two to three days. Rural stations may buy every five days or so, so during that window, the wholesale price can go up dramatically — several cents if not five or seven cents a litre.”
As of April 1, the Alberta government will raise its fuel tax by four cents, bringing the total tax up to 13 cents a litre.
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The price of WTI oil is hovering below the US$80-a-barrel benchmark the government previously set.
Under the province’s affordability measures, the higher the average price of West Texas Intermediate (WTI) for the 20 trading days leading up to the 15th of the month preceding the start of the next quarter, the less fuel taxes Albertans have to pay.
At the average price of US$79.99 or less, Albertans pay the full 13 cents per litre. Between US$80 and US$84.99, a nine-cent tax is added per litre of fuel. Between US$85 and US$89.99, a 4.5 cent per litre tax is added. And at US$90 barrels, fuel tax collection is paused.
The program is reviewed quarterly.
“If you look at Gas Buddy, the Alberta average is about $1.44 as of today, so we’re still amongst the lowest in Canada,” said Alberta Minister of Finance Nate Horner on Tuesday. “As to what retailers are doing, I really couldn’t comment.
“But I think it’s important to understand we’re still very much in favour of the WTI linkage. We think it’s very defensible, and hope that Albertans understand there could be potential relief as we move into the summer.
“When oil is high, fuel is high, right? And that’s also when the government will be in the best position to provide that affordability,” Horner added.
When asked if the province would be looking into gas prices being hiked right before the gas tax increase, Horner said: “that’s been looked into over the course of the program. So I think we’re pretty comfortable with the process, but I think Service Alberta and some of the other ministries will continue to keep an eye on it.”
The federal carbon tax is also scheduled to increase April 1.
De Haan said typically gas prices peak at some point in April or May, when refineries finish maintenance.
“In a normal year, we do tend to see some relief shortly after May Long, whether that’s before or going into June, we tend to see prices plateau and then slightly recede.”
He expects Alberta drivers won’t get any relief for at least a few more weeks. But consumers should not hold their breath for sub-$1 gas.
“That’s almost an impossibility at this point, simply because the carbon tax continues to transition higher every April 1 for the next few years. The days of sub-dollar gasoline are probably behind us,” De Haan said.
And while prices are high, he doesn’t think they’ll reach the nearly-$1.90 peak recorded in 2022.
“I’m not expecting us to set any records this summer. In fact, we’re getting very close to the peak we saw last year, which was about $1.46 provincially. Now, today, we’re at about $1.44 provincially. I think we’ll probably exceed that just by a little bit — we may even get up to $1.55 — but I’m hopeful though that we won’t go beyond $1.60 a litre.”
De Haan says it’s up to drivers to be savvy, aware and drive efficiently.
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