Alberta’s Smith says province pausing its gasoline tax as of Oct. 1

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

"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 concerns that a rebate may be more effective because it's not always certain that tax cuts get passed on to consumers.

But on Tuesday, Smith said her government heard from Albertans that they'd rather get relief directly at the pumps. "So that's what we're going to do," 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.

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 said.

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.

According to the Canadian Automobile Association, the average cost for a litre of gas across the country Tuesday was 182.5 cents Tuesday. That's 50 cents a litre higher on average than this time last year.

The gas price tracking website GasBuddy pegged provincial averages that were as high as 220.0 cents per litre in Newfoundland and Labrador, and as low as 177.3 cents in Alberta and Ontario.

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

Lisa Johnson, The Canadian Press

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