The decision made by Alberta’s premier in the spring of 2022 to eliminate the province’s gas tax has been reversed, and it will be reinstated at nine cents per litre in the upcoming year. The initial removal was intended to alleviate the affordability crisis, but the return of the tax is now influenced by the current oil prices.
The gas tax in Alberta is linked to the price of oil, and historically, higher oil prices have enabled the province to suspend the tax. According to the existing policy, Alberta does not impose a gas tax if West Texas Intermediate (WTI) oil prices exceed $90 per barrel. Currently, WTI oil is priced around $70 per barrel, resulting in the majority of the tax being reintroduced at the fuel pumps.
During the suspension period, families were saving approximately $70 per month, as reported by the Canadian Taxpayers Federation. However, this decision has faced criticism from NDP energy critic Kathleen Ganley, who argues that reversing cost-saving measures is inappropriate given the challenges Alberta is facing, such as escalating rents, a housing affordability crisis, high grocery bills, and rising power bills.
Premier Danielle Smith had previously warned of this change on her province-wide radio show weeks ago, emphasizing that even with the tax, Albertans will still experience some of the lowest fuel prices in Canada. Despite this reassurance, Concordia University economics professor Moshe Lander suggests that developments in the ongoing Middle East conflict could influence future oil prices, posing a potential risk to consumers.
Furthermore, additional challenges may arise at the gas pumps, as the federal government plans to increase the carbon tax to 17 cents per litre for gas and 21 cents per litre for diesel on April 1. This comes after a period of notably lower gas prices, with one station, Costco in Tsuu’tina Nation, even dropping to 99.9 cents per litre.
