Gas prices in Alberta have shot up by about 10 cents per litre in the last couple of days and experts say we haven’t yet seen the highest prices at the pumps.
The price for gas in Edmonton spiked to about $1.55.9 per litre Thursday morning. The price in Calgary hit $1.57.9, although cheaper prices could be found at some stations in both cities.
The president of Canadians for Affordable Energy, an organization focused on keeping energy services affordable, said Russia’s invasion of Ukraine has “everything to do with it.”
“Russia is the third-largest producer of oil,” Dan McTeague explained. Many nations, particularly those in Europe, rely too much on Russian oil, he continued. But he said that even the United States, which would have received one million barrels of oil a day through the cancelled Keystone XL Pipeline, “now relies on almost 800,000 barrels a day on Russia.”
“As we sanction Russia — its oil and gas — it leaves the world extraordinarily short on supply.”
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Canada has banned all imports of Russian crude oil, though the country hasn’t been dependent on crude oil from Russia for years.
The trickle-down effect
The price of oil sat at about US$110 per barrel Thursday and McTeague said we can expect to see that increase to US$130 or US$140 over the next couple of weeks as the conflict continues.
Experts said it won’t only be drivers who are affected by the price increases. The cost of diesel is rising at an even faster rate, McTeague explained. The price increases will trickle down to everything from public transit to the cost of food, he explained.
“We’re going to pay much more for everything, even those of us who don’t drive,” he said. “Agricultural products and of course processing costs and transportation costs are going through the roof.
“It looks like we’re going to have to, as it were, buckle up and hunker down for the next several weeks at least.”
Charles St-Arnaud, a chief economist with Alberta Central, said that while the increase in oil prices will be a benefit to the province and oil sector revenues, the general public does not stand to benefit.
“We’ll be paying more for natural gas to heat our homes, more for gasoline to put in our cars, more for electricity because here in Alberta a lot of our electricity production is made through natural gas. All of that will increase and push inflation higher,” he explained.
“Inflation is starting to erode their purchasing power,” St-Arnaud said of consumers in Alberta. “Interest rates are increasing too, so suddenly their debt services is up. So everything is kind of pushing against them having space for discretionary spending.”
Alberta’s 2022 budget promises natural gas bill rebates for consumers. A utilities rebate will be triggered starting Oct. 1 if gas prices exceed $6.50 a gigajoule.
Opposition leader Rachel Notley called it a phantom plan, given that the government’s own forecasts don’t predict the price will ever reach that threshold and the government has not set aside any money to pay it out.
Premier Jason Kenney was asked about the rising gas prices during an unrelated news conference Thursday morning. He said that while he is concerned about the increasing cost, the government’s focus right now is on the natural gas rebate program announced in the budget.
“We know that these gas prices are hitting everybody all around the world, not just here,” Kenney said.
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The premier also said it wouldn’t make sense for Alberta to offer a rebate with the federal carbon tax set to increase to 11 cents on April 1. He once again called on the federal government to scrap its carbon tax.
“The urgent thing is for the government of Canada to stop making this situation even worse, because they plan on April 1 on increasing taxes on gasoline through an increase in the carbon tax. This is ridiculous,” he said.
“If Justin Trudeau were to agree not to raise the gas tax, federal gas tax, on April 1, then we would look for sure at further relief here in Alberta. But a provincial cut when he intends to increase it leaves consumers no further ahead.”