'At the mercy of the market': will oil price spikes have a lasting effect in N.W.T.?

Gas prices have risen sharply since Russia's invasion of Ukraine, and politicians in the Northwest Territories are considering if anything can be done to cushion price shocks at the pumps.

Prices have spiked at private retailers, while communities with government delivery and set prices have not seen such great fluctuations. 

In the Northwest Territories Legislative Assembly on March 11, Tu Nedhé-Wiilideh MLA Richard Edjericon said communities need relief from the territory's fuel tax and from inflation, which has reached its highest since 1991. 

"Northerners and constituents in my riding are feeling the pain, especially at the pumps," said Edjericon.

He asked whether the Northwest Territories government would consider a pause on its fuel tax, in line with the Government of Alberta's announcement last week that it would pause collection of 13 cents per litre of provincial fuel tax by April 1. 

"In a vast and sparse territory, high gas prices raise the cost of goods for all Northerners," and pausing the territorial fuel tax would "put money back in the pockets of Northerners when they need it most," he said. 

Yellowknife North MLA Rylund Johnson tweeted on Friday that pausing the fuel tax is "not a priority."

He said a fuel tax break would subsidize driving, but result in cuts to basic services like health, education, water and sewer. 

The N.W.T. government expects to collect an estimated $19.3 million in fuel tax in 2022-23. 

Finance Minister Caroline Wawzonek said her department is bringing information to cabinet for consideration. 

"It's difficult of course to simply … say we're going to slash taxes without giving some consideration to what those impacts are," she said.

Alberta is in a different position than the N.W.T. — when gas prices drop again, Alberta will benefit with higher revenues. 

The Northwest Territories government has not raised its fuel tax since 1997. 

The territorial government's fuel tax does not apply to heating fuel and carbon tax is fully rebated for heating fuel, wrote Todd Sasaki, a spokesperson for the territorial government's finance department, in an email.

The Northwest Territories collects 10.7 cents per litre from highway accessible communities and 6.4 cents per litre for gasoline in communities not connected by highway.

The Northwest Territories' winter road resupply operations are more than halfway done, but as Lorne Browne, director of the infrastructure department's fuel services division explains, they are paying wholesale market prices. 

"We are at the mercy of the markets along with most of the rest of the world," said Browne.

Community resupply operations buying market price

The N.W.T. government brings fuel into communities that are only accessible by ice road in the winter and by barge or tanker in the summer and sets rates for communities, which is why private pumps have fluctuated wildly while purveyors of government-delivered fuel have been able to keep prices the same. 

The prices listed by the N.W.T.'s infrastructure department remain in effect, wrote spokesperson Laura Busch. 

The winter resupply for communities only reachable by winter road, like Colville Lake and Wekweètì, started on Feb. 2, is 60 per cent complete and is on schedule for completion by early April, said Browne.

The territory's next big purchase will be in June and July, to transport gasoline purchased in Edmonton and transport it down the Mackenzie River to the high Arctic. 

The government has also shipped fuel by tanker from the western U.S. up the North Slope of Alaska for delivery to the western Arctic. 

"Predictions and projections on fuel pricing is about equivalent to gambling essentially," he said.

"When you think you've got a solid price … something happens in Eastern Europe that blows that out of the water."

About 85 per cent of the fuel sold by the infrastructure department is diesel, and one of its biggest customers is the N.W.T.'s power corporation, said Browne.

The N.W.T. government recovers all of the costs of purchasing and transporting fuel.

"For every dollar we spend on fuel, we charge a dollar for those fuel products," said Browne.