How will carbon tax affect Alberta gas prices?

How will carbon tax affect Alberta gas prices?

Carbon tax Alberta gas prices

Image of person filling a car up after Alberta carbon tax comes into effect

For  many months now, there has been much discussion about the Alberta NDP implementing the Climate Leadership Plan, the so-called Carbon Tax. Well, that time has finally come, and the carbon tax has officially come into effect as of January 1st, 2017. We have had several people comment that as they were heading home after celebrating the new year, they had noticed that gas prices had already begun increasing at gas stations. In fact, some drivers were lining up on new year’s eve in order to fill up before the carbon tax raised Alberta gas prices.

There has also been a lot of commentary on how the carbon tax would affect the gas prices. Some people were saying it was only a few cents per liter, others saying 20 or 30 cents per liter. Some people said that there would be a small increase now, with a much larger increase next year. It seemed to us that there was definitely some misinformation going on, so we decided to investigate and look at what the posted information says. The Alberta carbon tax was likely going to impact driving and gas prices for all of us, so we wanted to find out what’s actually going on.

Carbon tax levy

We did a quick google search, and we landed on the government’s carbon prices page. Here’s what the government says is going to happen with the actual tax side of things: fuels that produce emissions will be taxed at $20/tonne in 2017, and this will increase to $30/tonne in 2018. Global News and CBC also reported these numbers, so we can assume they are correct. So what does that actually mean for gas prices at the pump? Luckily the government website has that listed as well.

Carbon tax Alberta gas prices

Starting with the 2017 $20/tonne carbon tax, Alberta gas prices will increase by an addition of 4.49 cents/L for gasoline, 5.35 cents/L for diesel, $1.011/GJ for natural gas, and 3.08 cents/L for propane.

In 2018, the cost levied will be a $30/tonne carbon tax, increasing Alberta gas prices by an additional 2.24 cents/L for gasoline, 2.68 cents/L for diesel, $0.506/GJ for natural gas, and 1.54 cents/L for propane. This means that the total carbon tax gas price increase will be 6.73 cents/L for gasoline and 8.03 cents/L for diesel in 2018.

How much extra will it cost?

Since single Liter costs can be hard to understand given the typical gas tank is tens of liters, we decided to look at how much extra it will cost to fill up an assortment of Alberta cars. We based our calculations on the assumption that you’ve coasted into the gas station running on fumes.

Honda Civic

The Honda Civic is the most sold car in Canada, so it made sense to look at it first. With a tank of 46.9 Liters across all of the new models, you’re looking at an extra $2.10 to fill up. The cost increases to an extra of $3.15 in 2018.

Ford F-150

The size of the gas tank on the Ford F-150 depends on the size of the model, with three options. The 87L option will run you an extra $3.9 ($5.85 in 2018), the 98L option $4.40 ($6.59 in 2018), and the 136L option will cost an additional $6.10 ($9.15 in 2018) to fill up due to the Alberta carbon tax.

Toyota Prius

The Prius has a relatively average sized tank at 43L, but if the majority of your driving is within an urban area, then your fuel usage will be minimal anyways. If you do somehow manage to run the Prius empty, the additional cost to fill it up is $1.93 this year, increasing to $2.89 next year.

Volkswagen Golf TDI Diesel

The diesel Golfs are renowned for their excellent fuel economy, which just adds extra sting to the 86 cent higher carbon tax placed on the diesel price. The Golf TDI also has a slightly larger fuel tank than the Honda Civic, coming in at 50 Liters. This means a complete fill up will cost an extra $2.67 this year, with the increase going up to $4.01 next year.

Diesel Semi-Truck

The commercial trucking industry is where we will likely see the greatest impact on carbon tax Alberta gas prices, and these costs will likely be passed onto consumers. Companies are already adding a carbon tax surcharge to their fees. Data on tank sizes for tractors was difficult to find, as they tank sizes tend to greatly vary. On average though, diesel tank sizes range from 450 Liters to 1100 Liters per tank; and typically semi-trucks will have two diesel tanks. Using these numbers, a truck with a total capacity of 900 Liters will be paying an extra $48.15 to fill up in 2017, and $72.27 in 2018. On the high end, a truck with a total capacity of 2200 will be paying $117.70 per total fill-up, which will increase to $176.66 next year.

Jerry Can

If you were one of those people using these to stock up on New Years Eve, how much money did you save yourself? With the average jerry can size being 5, 10, and 20 liters, this equals savings of $0.22 (yep, 22 cents) for the 5 Liter container, $0.44 for the 10 Liter, and $0.88 for the 20 Liter container. Diesel savings would have been $0.26 with a 5 Liter, $0.52 with a 10 Liter, and $1.04 with a 20 Liter jerry can.

Summary

So is going out of your way to save a few cents per liter on gas worth it? In most cases, probably not. The Alberta carbon tax hasn’t raised prices by too much, we’re already seeing gas come back down to 108.9 and 106.9 cents per liter at some stations. However, every dollar counts, and over the entire year, those fillups start to add up. Assuming filling up every week, in the first year a Ford F150 with a 136L tank will pay an extra $317. That’s enough to fill up at least a couple of extra tanks. Unfortunately this will go up to an extra $475 in 2018. This is about an entire extra month of gas, which instead will go to taxes. As gas prices goes up, this extra amount puts pressure on your wallet.

 

Either way, driving is going to be more expensive in the future. For tips on saving, check out our post on gas saving tips.