Gas prices in Alberta trend downward amid U.S.-Iran ceasefire talk

News of a ceasefire deal between the U.S. and Iran is already having impact here in Alberta. The price at gas station pumps started to drop early Monday morning

Gas prices in Alberta have begun trending downward following reports Sunday night of a potential breakthrough between the United States and Iran and the reopening of the Straight of Hormuz.

The drop at the pumps comes just weeks before Albertans are expected to see additional relief from a planned suspension of the provincial fuel tax, which will equate to 13 cents per litre.

In Calgary, retail gas prices across the city were seen at the lowest, around $1.44 per litre on Monday morning.

However, political observers are urging consumers not to celebrate just yet.

“I don’t know if it’s a real deal,” said Duane Bratt, a political science professor at Mount Royal University.

“Even though we are obviously self-sufficient, more than self-sufficient, our entire economy is based on the export. Look at what consumers are paying. And so yes, they have dropped, but they’re going to rise back up if this turns out to be a mirage.”

Global supply constraints are also expected to slow down any dramatic, long-term drop in prices, according to one chief economist.

Pedro Antunes at Signal 49 Research says supply remains low and will take time to restock.

“Globally, inventories have been drawn down to their very lowest limits. The oil inventories, that is, so it will take some time to get oil prices back down,” Antunes said.

For Alberta’s fuel tax relief program to kick in, West Texas Intermediate (WTI) must remain above $90 per barrel for 20 trading days leading to the 16th of the month prior to the start of the second quarter.

“The provincial government certainly benefited from the uptick in oil prices, there’s no question about it, as has anybody who’s been exporting oil,” said Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce.

“But I think the other piece is from an inflationary standpoint—I think we have to be relieved (by a price drop) because inflation does harm economic growth.”

Premier Danielle Smith says it has also been a challenge to find a proponent for a pipeline project, expected to be submitted to the major projects office on July 1st.

“The reason no one is stepping up saying, ‘Hey, pick me,’ is because the governments have created so much uncertainty over the last 10 years and so much cost that nobody’s willing to partner until they know it’s a sure thing,” Smith said.

Smith called on the federal government to work with the energy sector so the private sector sees it as a partnership.

Smith’s comments come just a week after Alberta’s energy minister Brian Jean told reporters a Fortune 500 company is in talks to fund the entirety of the pipeline project.