Alberta to pause provincial fuel tax until 2027

After months of calls to do so, the Alberta government announced Tuesday it will pause the provincial fuel tax on gasoline and diesel.

The tax is 13 cents a litre on gasoline and diesel, the province said. The suspension begins Oct. 1 and will last until the end of the year.

Under Alberta’s relief program, quarterly reductions to the provincial fuel tax are introduced when the price of the American benchmark crude oil, West Texas Intermediate, averages at least US$80 per barrel over a review period of 20 trading days.

The average price of WTI during the last review period from Aug. 18 to Sept. 15 was $90.54, the Alberta Ministry of Finance said.

Global oil prices have been volatile for much of 2026, after jumped in the weeks after war broke out at the end of February between the United States and Israel with Iran, and when the Strait of Hormuz — a critical passageway for oil transports — was mostly blocked.

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The province’s announcement comes the same day Ottawa also said its suspension of the federal fuel excise tax would be extended until the end of January 2027 under proposed new legislation.

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When it was first suspended in April, Prime Minister Mark Carney said the suspension would remove up to $0.10 per liter on gasoline and $0.04 per liter on diesel fuel.

Average gas prices across Canada recently have been around $1.82 per litre.

They reached that level last weekend in Alberta, where drivers normally enjoy lower prices than the rest of the country due to the province’s proximity to resource extraction and refining. As of Sept. 21, the province said the retail gas prices in Alberta had averaged at 175.5 cents/litre.

Albertans have been calling on the UCP government to suspect the fuel tax for half a year but until now, the province has resisted doing so.

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Instead in June, Premier Danielle Smith announced a $100 cash rebate in lieu of the province reducing its tax on gasoline at the pumps.

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Alberta last suspended its fuel tax for six months at the beginning of 2023 to help residents with costs due to pandemic-related inflation. The discount was extended to the end of that year before being reinstated Jan. 1, 2024, as energy prices softened.

The province said Tuesday it will continue monitoring oil prices throughout the next quarterly review period and if the average WTI oil prices exceed the threshold, “will determine the best options to ensure relief reaches Albertans.”

The province’s fuel tax rates for gas and diesel are reviewed every three months on Jan. 1, April 1, July 1 and Oct. 1.

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To ensure fuel tax savings are passed onto drivers, the province said it will be monitoring pump prices for any wrongdoing and “will take action against businesses that price gouge at the pumps.”

Businesses found guilty of price gouging can be fined by the courts up to $300,000 or receive up to two years of jail time, the government said.