Surging oil prices may help Alberta budget deficit, but gas tax relief not in the works: Horner

Alberta's finance minister says the provincial gas tax will continue, despite calls from federal Conservative leader Pierre Poilievre for relief at the pumps.

Albertans shouldn’t expect cuts to gas taxes quite yet despite surging oil prices that could potentially alleviate the province’s $9.4-billion deficit, says finance minister Nate Horner.

The U.S.-Iran war has inflated oil prices from what the UCP government initially budgeted for as $60 per barrel to anywhere between $90 and $110 per barrel.

The surge in oil prices means greater revenue for oil and gas companies and, in turn, a better outlook than the province projected – for now.

“We’ve done a lot of napkin math in the office, but I would say this, we were projecting a $4.1-billion deficit at Q3; definitely think that situation has improved,” Horner told reporters at the Alberta legislature on Thursday.

“The trouble with these kinds of estimations, there’s a lot of complications … So I think it’s dangerous to speculate too much, but I’m confident to say the position’s improved.”

How much the situation has improved, he added, won’t be known concretely until the end of June.

Despite a bump to oil and gas, the average Albertan likely won’t see reprieve at the pumps.

Earlier Thursday, federal Conservative Leader Pierre Poilievre called for federal gas taxes to be scrapped for the rest of the year considering rising prices per litre.

That would eliminate the fuel excise tax, the GST on fuel and the clean fuel charge and likely cost the federal government around $5.25 billion this year.

Horner says the federal government’s math may look different from the province’s, but that instant gratification could be the wrong move.

“I think they should look for something that’s long term, as opposed to these ad hoc, reactionary changes that everyone’s looking for,” he said.

Premier Danielle Smith previously told Albertans her government would not implement the Fuel Tax Relief Program – provincial legislation that cuts fuel tax in the event of higher oil royalties – given the capricious situation in the Middle East.

Fuel tax relief is typically applied when the price of West Texas Intermediate averages above $90 per barrel. That average is determined from 20 trading days leading up the 16th day of the month preceding the start of the next quarter.

The next quarter began Wednesday. Smith, leading up to April 1, said removing fuel tax right now wouldn’t make a dent in the cost of a tank of gas.

Horner said any changes they make to the fuel tax would also be locked in for the remainder of a fiscal quarter, meaning the price of oil could drop substantially and the province would suddenly be at a loss for desperately needed tax revenue.

“We’re always looking at everything, the levers. There aren’t as many as people may think. And I would just remind everyone that this is day two of the fiscal year. There’s a lot of days left in the year,” he said.

“This is part of the rollercoaster Albertans can expect to change under this government. We’re not going to drastically increase spending and then have drastic cuts. We’re trying to keep it smooth, do the right thing in surplus years, weather the deficits.”

The next fiscal quarter, when the fuel relief program could be triggered, begins July 1.

With files from CTV News Calgary’s Stephen Hunt and CTV National’s Graham Richardson