Volatile gas prices expected to soften impact of Alberta fuel tax holiday: experts
While Alberta suspended its collection of the provincial fuel tax, market experts say volatile gas prices will likely mean motorists will not notice the difference.
On Jan. 1, the provincial gas and diesel tax holiday resumed as an affordability measure. Rising prices due to global market factors have eaten into how much of the price saving Albertans are noticing, two market experts told CTV News Edmonton.
Richard Masson, World Petroleum Council chair, says the continued Russian invasion of Ukraine and new European Union rules on purchasing Russian crude are unsettling oil prices.
"World oil prices have been bouncing all over the place and it's been difficult for people to predict what's going to happen with prices in terms of supply and demand," Masson said.
While Alberta's economy is strong, Masson predicts continued fuel price volatility for the remaining winter months and into early spring.
He believes China's reopening after persistent COVID-19 lockdowns could become another source of instability.
"Is it going to end up in a bigger lockdown after all of the reopening," Masson asked. "Or are they going to be able to get through this and see their economy start to rebound?"
All of these factors have meant the 13-cent reduction many consumers expected to see, will likely be a four-cent a-litre drop, Masson said.
"Four and a half cents is hard to see when prices can be volatile by two to three cents a day easily," he added.
Even in a more stable market, economist Moshe Lander is skeptical that savings would be passed along to consumers.
"Inevitably, it's going to be swallowed up by profiteering, not in the illegal, immoral sense, but these companies are going to realize they can pocket that cash and consumers aren't going to be in a position to do anything about it," Lander added.
"It's profit maximizing," Lander said. "So, they max profits, and when somebody looks their way, they say, 'Hey, maybe we should change our behaviour because someone is watching.' And when people stop watching, they go back to doing what they were before."
Last time the province fully stopped its collection of the gas tax, prices went down initially and then rose back up. Then-premier Jason Kenney said he would ask the competition bureau to investigate potential gas price fixing in the province.
- Some Edmonton area gas stations drop prices after Kenney asks for price fixing probe
- Kenney to ask competition bureau to investigate potential gas price fixing in Alberta
"Right now, Alberta is probably 20 cents a litre lower than the national average and 40 cents a litre lower than the B.C. average," Masson said. "So we are pretty well off."
Masson said previous surveys of gas pricing fixing have come up empty, with no evidence of collaboration between retailers found.
"Oftentimes, prices will go down as competition is intense [for gas retailers]," he added. "Then all of the sudden, demand is strong, or there's some disruption in supply, and it gives the retailers a chance to raise prices and so they do because they can."
"When you're competing, and everybody is posting a price, and you see the other guy raise the price, you think, 'Well, I want to get profit too.' But it's really hard to prove whether that is too much profit or too little profit.'"
In a statement to CTV News Edmonton, Finance Minister Travis Toews said crude oil prices and other regional supply-and-demand factors all factor into the price of gasoline.
"To ensure Albertans are protected, Service Alberta's Consumer Investigations Unit monitors the marketplace across the province to determine if gas stations are engaging in unfair practices," Toews added.
"Based on this review, they found no incidents of price gouging, as in general, the retail prices between local fuel stations were within reason and continue to be lower than average prices when compared to other provinces."
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