'Better than nothing': Even as provincial tax break fades, some gasoline deals in Calgary remain

Discounts at the pumps can still be found in the Calgary area despite a New Year’s rise in prices as the province ended most of its fuel tax pause on Monday. Some Calgarians have been scrambling to find pump prices that hadn’t yet been fully affected by a nine cent per litre price increase after the province lifted most of a 13 cent tax holiday that dates back to Jan.

1, 2023. According to Gasbuddy.com as of early Tuesday afternoon, the cost of filling up varied more widely across the city than it normally does, with the price at Costco at Buffalo Run Boulevard coming in at $1.069, while at the nearby Tsuut’ina Nation Jim Starlight Centre it was $1.089. That was in contrast to other stations where the full effect of the tax relief’s rollback was more apparent, with prices from $1.249 to as high as $1.289.

Prices at many service stations in Calgary fell somewhere in the middle, at $1.129 to $1.189. At the Beacon Hill Costco gas station, the price had only been pumped up by five cents to $1.099 from its Dec. 31 level, and its multiple lanes were backed up beyond the store’s parking lot by drivers seeking lingering deals.

By contrast, nearby service stations with prices above $1.20 per litre were nearly deserted. Those lined up to fill their tanks at the Beacon Hill Costco said they didn’t mind the extra wait. “If you can save a few cents here and there, then why not,” said motorist Satwand Dhalay, adding she’s frustrated with the gas tax reinstatement.

“I’m never happy with that — they take away everything, and when it comes to giving you anything, they don’t.” But Joseph Kwok said he’s grateful for any kind of tax relief, past and present. “It’s better than nothing — it’s a lot cheaper than in B.C., where it’s crazy,” he said.

Most gasoline prices in Vancouver on Tuesday were approaching $1.70 a litre. When the province suspended its diesel and gasoline tax a year ago, it was tentatively scheduled to end as 2024 began. And with a recent dip in oil prices and the resulting hit to government coffers, most of that levy holiday has indeed evaporated.

The province has said it made the move due to the price of West Texas Intermediate falling below $80 a barrel and that a decision on the fate of the remaining four cents of the fuel tax holiday will be made March 31. That hike in the price of fuel is just one more overhead cost his company has to deal with, said Dan Kourchounov, owner of Calgary based Navy Seal Transport Ltd.

“The fuel prices, we just push them onto the clients and they’re pretty cool with it,” he said. “We just have to deal with it — we have so many problems, it’s one of hundreds.” The rising costs of doing business, he said, has led to his company ending operations in Ontario and Quebec. The electrification of trucking should bring some relief but its mass application is “still maybe five or six years away,” said Korchounov.

Gasoline prices have been on a wild ride since the start of the COVID 19 pandemic, when an economic slowdown slashed the demand for oil and the cost of fuel to 61 cents per litre in April 2020. In the spring of 2020, West Texas Intermediate crude prices crashed below $20 a barrel, falling into negative territory briefly that April.

By October of 2021, oil prices had rebounded, as did the cost of gasoline in Calgary to $1.39 a litre, a level that was contributing to ballooning inflationary pressures. When the price of crude rocketed to $120 a barrel in June of 2022, so did the cost at the pumps, with prices further surging to an average in Calgary of $1.919 a litre the following month.

Economists and energy sector analysts were convinced Calgary motorists were being gouged by an industry that was enjoying higher profit margins than were being seen in other parts of the country. The province had already brought in an initial 13 cent per litre tax holiday on April 1, 2022, to shield consumers, and tasked its consumer investigation unit to monitor instances of price gouging, though nothing came of it.

But by June of last year, the price of oil had fallen back to around $75 a barrel, dropping gasoline prices by 21.6 per cent to around $1.40 per litre locally. Since August of 2023, that price has been dropping from the $1.40 range as oil prices have plunged, only to see an uptick with Monday’s move by the UCP government, which has been scorched by the Opposition NDP.

It’s coming at a time, they say, when Albertans are being hit with other fee and price hikes amid persistent inflationary pressure on a host of fronts. “The gas tax was removed in advance of the (2023) election during rising inflation,” the party said in a statement Monday. “While the rate of inflationary growth has lowered, many families are left paying off debts, and the cost of essentials like food and rent remain at record highs in many areas of the province.” But UCP Finance Minister Nate Horner has insisted Albertans will still see a price break of four cents a litre for the time being, adding the tax is a stable funding source.

“Alberta’s fuel tax is a predictable source of provincial revenue, helping to offset the volatility of other revenue sources,” Horner said Dec. 19 when announcing the reduction of the tax break. This week’s hikes at the pump won’t be the last over the next three months, said an industry analyst.

Vijay Muralidharan said scheduled maintenance shutdowns of Canadian and U.S. refineries this winter could boost pump prices by five to 10 cents a litre, while an increase in Ottawa’s carbon tax to take effect April 1 will boost that by another two cents. “If something goes wrong (with refineries) in Canada and the U.S., we could see even higher prices than that,” said Muralidharan of R Cube Economic Consulting in Calgary.

But he said a recessionary slowdown that’s already taking hold in Canada and a possible production cut by OPEC should see those pump prices recede after 2024’s first quarter. “I don’t see prices going to $2 a litre . . . I think the prices will hold or drop back,” said Muralidharan. X (Twitter):.