No, you’re not paying more for gas because of Alberta’s carbon tax
Joel Krahn/Yukon News
Yukon drivers may have noticed they’re paying a little more at the pump these days.
Gasoline prices in Whitehorse were hovering around $1.20 per litre as of Friday morning, up from about $1.12 on Dec. 21, according to the Yukon Bureau of Statistics.
So does the price hike have anything to do with Alberta’s new carbon tax, which came into effect on Jan. 1?
The answer, it appears, is mostly no. And maybe also a little bit yes. But mostly no.
As of this week, Albertans are paying a carbon tax of 4.49 cents per litre on gasoline. The provincial carbon tax was implemented at $20 per tonne in the new year.
Yukon purchases most of its gasoline from Alberta. But that doesn’t mean Yukoners are paying Alberta’s carbon tax at the pump.
“In our tax plan, only gas that’s consumed in Alberta, burnt in Alberta, would be subject to the levy,” said Mike Brown, press secretary for Alberta’s finance minister. “So there shouldn’t be an impact on Yukon gas prices.”
Alberta’s carbon tax is applied to consumer purchases. So if Yukoners drove down to Alberta and filled up at gas stations there, they would pay the levy. But there’s no carbon tax on the gasoline imported for sale in the Yukon.
Alberta’s 2016 budget, which lays out the province’s carbon tax plan, includes a section on exported fuel.
“Fuel sold for export will be exempt from the levy as it is not consumed in Alberta and the related emissions are not released here,” it reads.
There are a couple of other ways that gas prices in the Yukon could be affected by the carbon price in Alberta. Fuel delivery trucks driving up from Edmonton will pay more when they fuel up at Alberta gas stations, and they could pass on that extra cost to Yukon customers. The carbon tax on diesel — used by most trucks — is 5.35 cents per litre.
But Jason Parent, vice-president with Kent Group, a downstream petroleum consulting company, said the impact of that price increase would be “fairly minimal.”
“Distribution costs in general are low,” he said.
Parent said it’s also possible that Alberta refineries could increase their wholesale gasoline prices because they, too, will have to pay increased fuel costs thanks to the carbon levy.
But refineries have to remain competitive, he said, so it’s “unclear” how much of that extra cost they could pass on to customers.
“It would be very, very small, most likely, and probably imperceptible,” he said.
Dan McTeague, a senior petroleum analyst at GasBuddy.com, agreed that Yukoners don’t have much to fear from Alberta’s carbon levy.
“There is no impact for Yukoners for gas prices regarding Alberta’s carbon tax,” he told the News by email.
So if Alberta isn’t to blame, why are prices up at local gas stations?
McTeague said that likely has to do with a couple of refinery problems in the American Midwest last month, which drove up gasoline prices.
“All western and northern Canadian gas prices are based on the Chicago spot market,” he said. “That market sets the trend for refinery prices in Edmonton.”
Parent said the hike could also be related to the rising price of crude oil, and to an increase in wholesale prices relative to crude oil. He said that wholesale prices can sometimes rise with no corresponding increase at the pump, which can then lead to a sudden jump.
“So that may have been building for some time, and then that eight-cent jump (in Whitehorse) is a margin correction,” he said.
Brown said that changes in the price of oil will have a “much bigger impact” on gas prices than the carbon tax.
In fact, gasoline prices in Whitehorse are now 20 cents per litre higher than they were a year ago, when they hovered just below $1 per litre.
In October, Maclean’s published an estimate from University of Calgary economist Trevor Tombe that a $50-per-tonne carbon tax, which is to be in place across Canada by 2022, will increase gas prices by about 11.2 cents per litre.
Last month, Yukon Premier Sandy Silver signed a new national framework on climate change, along with most of Canada’s premiers. The agreement will bring carbon pricing to the Yukon, though Silver plans to wait for Ottawa to impose a carbon tax on the territory in 2018 instead of creating his own.