Alberta Premier Danielle Smith says province pausing its gasoline tax as of Oct. 1

EDMONTON — Alberta Premier Danielle Smith says her government is axing its fuel tax for three months to help combat the cost at the pumps.

Smith says drivers will save 13 cents a litre on gasoline and diesel starting Oct. 1.

“Every fill-up will cost Alberta families and businesses less,” she announced Tuesday during a speech to the Calgary Chamber of Commerce.

In June, the province decided to not cut the gas tax at the pumps. Instead it offered $100 affordability cheques to most Albertans.

At the time, Smith cited concern that tax cuts don’t always get passed on to consumers.

But on Tuesday, Smith told reporters Albertans were not happy with the rebate program.

“We have to be willing to take criticism and adjust and change course,” she said.

In a news release, the government said it will keep an eye on pump prices. Businesses found guilty of price gouging could be fined by the courts up to $300,000 or receive up to two years of jail time.

The cheque-rebate program came with its own hurdles. The online application portal was criticized by some as invasive and onerous.

So far, the finance ministry said about 1.4 million Albertans have applied for or received the rebate — a figure that is less than half of those eligible. Albertans still have until Sept. 30 to apply online for it.

Finance Minister Jason Nixon said he’s still not entirely confident the tax cut will be passed on to consumers, but the low uptake for the rebate makes it clear the government doesn’t have the technological capability to dole it out efficiently.

“Our main goal is to get every dime that we can into Albertans’ pockets to help with this time of tight affordability,” he said.

Nixon also said, to avoid sticker shock, provincial law prevents the government from fully reinstating the fuel tax between January and the end of March next year. If global oil prices fall, the tax could be partially reinstated.

For months, the Opposition NDP had been calling for Smith’s United Conservative Party government to axe the fuel tax.

On Tuesday, Leader Naheed Nenshi said he’s glad they’re changing course, but he called the UCP’s rebate program “an absolute failure.” He said Tuesday’s announcement also appeared to be a cynical move by Smith to shore up popularity following her party’s byelection loss last week in Calgary.

“I wish this government had motives beyond political survival, but they don’t,” Nenshi said.

Fuel prices have been driven sky high since the United States’ war on Iran began in late February, choking the Strait of Hormuz, a vital shipping lane at the mouth of the Persian Gulf.

The impact has meant a financial U-turn for Alberta, which is heavily dependent on oil exports. In February, Smith’s government predicted a $9.4-billion deficit this fiscal year. That forecast is now a $2-billion surplus.

Seven months ago, the province anticipated West Texas Intermediate — the North American benchmark oil price — would average US$60.50 a barrel this year. But between Aug. 18 and Sept. 15, the average price of WTI was US$90.54.

For the quarter, it’s averaged US$83 per barrel, Smith told the Chamber.

Governments across Canada are trying to help people facing rising day-to-day costs. The federal government has extended its fuel excise tax until the end of January, a move that is expected to save drivers up to 10 cents a litre on gas.

The Canadian Automobile Association estimates that the average cost for a litre of gas across the country Tuesday was 182.5 cents. That’s 50 cents a litre higher on average than this time last year.

The gas price tracking website GasBuddy, as of mid-afternoon, pegged provincial averages as high as 218.7 cents per litre in Newfoundland and Labrador, and as low as 177.1 cents in Alberta and 176.6 in Ontario.

This report by The Canadian Press was first published Sept. 22, 2026.

— With files from Bill Graveland in Calgary and Jack Farrell in Edmonton

Lisa Johnson, The Canadian Press