Province not considering fuel tax relief as Alberta gas prices remain high

While many Albertans continue to feel the pinch at the pump, Premier Danielle Smith says the government is not considering any fuel tax breaks, as it does not believe it will make much of a difference.

Speaking on her radio program Your Province, Your Premier on Saturday, Smith said there is not much her government can do to alleviate the high cost of gas, which hovered around $1.50 per litre across much of Alberta Monday according to GasBuddy.com, even if the province paused the provincial fuel tax.

"We could take that off, but you'll still be facing the high prices at the pump, because the world prices are just out of our control," Smith told a caller who asked if the province would consider reducing or pausing the tax.

Alberta's fuel tax is currently 13 cents per litre. Smith said even if the government were to cut the tax, the most it would save consumers is $7.15 to fill a 55-litre tank.

"I think there are other things that we can do to be able to provide support, and we'll certainly be looking at ways to do that," she said.

Gas prices across the country have skyrocketed since the conflict in the Middle East began on Feb. 28, which sent oil prices soaring. Oil prices fell by more than nine per cent Monday, but remained high, with a barrel of West Texas Intermediate (WTI), the North American benchmark, trading at just under $90 US a barrel.

Smith said Alberta has a Fuel Tax Relief Program in place to adjust the provincial fuel tax when the price of oil is high. 

Through the program, the fuel tax is reduced once the average WTI price reaches $80 a barrel after 20 trading days in a quarter's review period, a spokesperson for Alberta's office of the Treasury Board and Finance said in an email Monday. If the price exceeds $90 during the review period, the tax is paused.

"The review period for this quarter is complete," the statement said. "The average price over the 20 trading days leading up to March 16 was $75.25. Therefore, the $80 threshold required to trigger relief from April 1 to June 30 was not reached."

The statement added that fuel tax relief is governed by legislation, which would have to be changed to trigger the policy. 

Then-premier Jason Kenney paused the fuel tax in 2022, following a rise in oil prices after Russia's invasion of Ukraine. It was reinstated two years later.

Moshe Lander, an economics professor at Concordia University, said one of the reasons the government is not removing the tax this time might be because it does not want Albertans to expect it will disappear every time there is a spike in oil prices.

"Once they become conditioned on it — that anytime anything goes wrong, we'll remove the fuel tax — then at some point it's just really hard to put that in," he said.

Lander added while high oil prices are not ideal for consumers, they do provide increased revenue for the province. He said with the 2026 provincial budget projecting a $9.4-billion deficit — something Smith also acknowledged Saturday — holding onto oil revenues instead of creating rebates or tax breaks is the smart move.