A day after U.S. President Donald Trump made a televised address to the nation in regards to the war in Iran, the value of oil took one other jump with the American benchmark West Texas Crude (WTI) nearing US$114 per barrel.
And with no end to the Middle East conflict in sight, the value of gasoline also continued its recent increase, selling at many Edmonton stations for about $1.74 per litre on Thursday — even higher in Calgary at $1.75 per litre.
Its a troublesome pill for a lot of Albertans to swallow in such an oil-rich province.
One other jump in the value of gasoline is prompting calls for the federal and provincial governments to offer drivers with some relief by cutting gas taxes.
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“A buck 74 — crazy price,” said Paul Marsh as he filled up his vehicle in Calgary on Thursday. “I can’t afford to drive day-after-day. I can’t wait to get back on my motorbike since it burns loads less gas.”
“I do appreciate the availability chain is such that its affects every thing from food prices, Amazon, everybody goes to be paying higher prices,” added Mike Shymka. “It’s regrettable for many individuals who depend on gas. It’s terrible.”
He agrees with recent suggestions that governments should consider providing some relief by cutting gas taxes.
“Economic policy is, during rough recessionary times, the federal government is so as to add more to assist people and when things are good then, you already know, take a little bit bit more tax,” said Shymka.
Asked if and when the provincial government might be offering any relief to Albertans, Finance Minister Nate Horner, on his way into the legislature on Thursday, offered no guarantees.
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“There’s lots of days left within the yr. I did table a $9.4 billion deficit. And I will even remind those who even when that situation improves, we’ll update you thru the quarters,” said Horner.
“We’re still sure by our spending rules throughout the fiscal framework.”
Asked in regards to the province cutting gas taxes, on his way into the Alberta legislature on Thursday, Finance Minister Nate Horner said the early it could occur could be around July 1.
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Alberta’s fuel tax is 13 cents per litre for normal gas, and 4 cents per litre for marked gasoline and marked diesel which is just available to authorized use is equipment like tractors and generators as a substitute of private vehicles.
Under Alberta’s gas tax relief program, quarterly reductions to the provincial fuel tax are introduced when WTI averages no less than US$80 per barrel over a review period of 20 trading days.
Between $80 and $89.99 per barrel of oil, the province provides tax relief of between 4.5 cents and 9 cents per litre of gas.
When oil hits $90 per barrel the fuel tax is suspended. But when the value falls again to below $80 per barrel, there isn’t a fuel tax relief.
Despite oil selling Thursday for well over $100 per barrel, the provincial finance minister indicated that Albertans might want to wait up to a few months for the province to make a call on whether it should cut fuel taxes.
“So there’s type of 20 monitoring days, trading days, business days in the midst of the quarter. So for the following quarter it could be from May 18th to June fifteenth where it could be monitored after which July 1st could be the trigger,” said Horner.
“I believe it makes a ton of sense that you have got an extended monitoring period because once it does come off at any level it stays off for the following three months. So imagine a situation where July 1 our tax comes off completely — oil can plummet the following day (and) it should still remain off for next three months. So a little bit little bit of delayed gratification there, but I believe the rationale is robust.”
Despite Horner’s insistence that the province needs to attend before deciding on a gas tax cut, he supports the concept of the federal government suspending its fuel taxes until the top of the yr, as suggested this week by federal Conservative Leader Pierre Poilievre.
Poilievre said Australia cut its excise tax by 26 cents per litre and Spain cut its sales tax by 30 cents per litre, saying he thinks Ottawa should do the identical.
“Possibly that’s something the feds want to think about,” said Horner. “The fuel taxes from the feds — I believe it’s about 25 cents a liter, about 10 cents in excise, perhaps seven in clean fuel and eight in GST. So I believe they need to search for something that’s long-term versus these ad hoc reactionary changes that everybody’s searching for,” added Horner.
The top of Petroleum Analyis at GasBuddy, Patrick De Haan, says cutting government gas taxes could drive up prices much more because it could increase the demand for gasoline by removing disincentives from Canadians driving.
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The top of Petroleum Analyis at GasBuddy, Patrick De Haan, expects the value of gas and diesel to proceed to extend until the Strait of Hormuz is reopened — through which about 20 per cent of the world’s oil supply flowed before it was shut down in the course of the Iran war.
Diesel, he said, could hit a record-high price inside the following few days.
For the availability of oil to be cut off heading into the busy summer driving season is very problematic, said De Haan, since it could contribute to a fair greater price increase.
And cuts to government gas taxes, he claims, could make it even worse.
“While there have been conversations about gas tax holidays and waivers and temporary temporarily reducing prices, those forms of measures, though terrific for the wallet, would likely further imbalance and cause prices to go up, by increasing demand and removing disincentives from Canadians driving,” said De Haan.
“Anything that may push demand up, whether it’s seasonal increases or reduction in taxes are likely problematic that would increase prices much more.”
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