By Nia Williams
CALGARY, Alberta (Reuters) -Canada's main oil-producing province Alberta will drop its provincial fuel tax to give consumers some relief from soaring energy prices, Premier Jason Kenney said on Monday, as he also urged the United States to revive the cancelled Keystone XL (KXL) oil pipeline.
The fuel tax waiver, taking effect on April 1, will knock 13 Canadian cents per litre off the price at the pump and remain in place while U.S. crude remains over $90 a barrel.
Benchmark U.S. crude futures jumped to a 14-year-high before settling at more than $119 a barrel on Monday as the United States and European allies considered banning Russian oil imports following Moscow's invasion of Ukraine. [O/R]
Canadian inflation is running at a 30-year high and expected to worsen as a result of the Ukraine crisis.
"This massive tax relief is in response to sky-rocketing costs and is going to provide Albertans with the relief that they need when the cost of everything is going up," Kenney told a news conference.
The United Conservative Party leader blamed the federal Liberal government's carbon price, due to rise to $50 a tonne on April 1, for piling unnecessary pressure on consumers.
Alberta estimates the tax relief will cost its treasury C$1.3 billion ($1.02 billion), but the oil sands province is set to rake in billions of dollars in extra revenue this year as a result of higher than expected oil prices.
Kenney also called on U.S. government officials to reconsider TC Energy (NYSE:TRP)'s KXL crude pipeline, which was cancelled last year after U.S. President Joe Biden revoked a key permit.
Canada is the world's fourth-largest oil producer, most which comes from Alberta's oil sands, and Kenney said importing more Canadian barrels could increase U.S. energy security.
However, oil sands producers are reluctant to spend more to significantly boost output, and TC is pursuing a trade challenge to recover costs associated with KXL.
The Calgary-based company did not immediately respond to a request for comment.
($1 = 1.2806 Canadian dollars)