News release

Gasoline Price Regulation in Effect July 1

Nova Scotians can look forward to more stabilized gasoline prices as retail gasoline price regulation takes effect in the province on Saturday, July 1.

"Regulating gas prices will protect consumers from the volatile ups and downs of the gas market, and independent retailers will have better chance to make a fair profit," said Jamie Muir, Minister of Service Nova Scotia and Municipal Relations.

The price posted at gasoline stations across the province starting at 12:01 a.m. Saturday will be in effect for two weeks. Service Nova Scotia and Municipal Relations will set the price of a litre of self-serve gasoline using the New York Harbor spot price as the benchmark. Added to that will be: a fixed wholesale margin of six cents; a transportation allowance of 0.3 to two cents; and a retail margin of four to 5.5 cents, and to a maximum of 7.5 cents for full-serve gasoline.

"This is a very transparent price setting process," Mr. Muir said. "The New York Harbor spot price is already the industry base for gasoline prices in North America, and our margins and transportation allowances are now fixed."

Recognizing that the cost of transporting gasoline accounts for part of the difference in price from one part of Nova Scotia to another, the province will be divided into six zones. Zone 1 includes Halifax, Hants and southern Colchester counties and will have a transportation allowance of 0.3 cents per litre. Zone 2 includes Lunenburg, Kings and eastern Annapolis counties, and will have a transportation allowance of 0.7 cents per litre. Zone 3 includes western Annapolis, Digby, Yarmouth, Shelburne and Queens counties, with a transportation allowance of 1.2 cents per litre.

Zone 4 is Cumberland County with a transportation allowance of 1.2 cents per litre. Zone 5 includes northern Colchester, Pictou, Antigonish, Guysborough counties as well as the Port Hastings-Port Hawkesbury area of Inverness County, and will have a transportation allowance of 1.2 cents per litre. Zone 6 will include the remainder of Inverness County, and Richmond, Victoria and Cape Breton counties and have a transportation allowance of two cents.

"The result of this is that, assuming stations charge the same retailer margin, the highest and lowest gas price in Nova Scotia will be within 2 cents of each other," Mr. Muir said. "Today, a five cent difference is not uncommon. For example, if the New York Harbor spot price is one dollar per litre, add to that the wholesale and retail margins and transportation cost, the minimum and maximum pre-tax price in Zone 1 would be $1.103 and $1.118 respectively. In Zone 6, those prices would be $1.12 and $1.135 per litre of regular self-serve unleaded."

Retailers can charge anywhere within the minimum and maximum, but not above or below those figures. All promotions and customer loyalty programs currently in place may continue.

Every other week, prices may change or stay the same, depending on the market over the past 14 days. Wholesalers will be informed of the price through a secure website and they will inform their retailers. The public will not receive advanced notice of prices. "We have learned from the experience of others," Mr. Muir said. "Despite the perceived consumer benefit of advanced notice, it can create other problems. In other jurisdictions, advance notice has sometimes led to dangerous traffic situations and has impacted retail supply. We want regulation to fix a problem, not create other problems."

Should there be significant changes in world gasoline markets during a two-week price period, an "interrupter" formula can be invoked to ensure prices do not spike up dramatically at the end of the period. This formula would ensure gasoline prices remain fair to consumers and supply is maintained.

The minister said there is a cost to regulating gasoline, and wholesalers will be assessed a fee of $0.0009 per litre sold to cover regulatory costs.

In addition to providing stable prices for consumers, regulation will help independent retailers, especially those in rural Nova Scotia, earn a fair profit. With this change in the market, individual retailers can choose from one of three options regarding their supplier contracts. They may continue in their current contracts and be guaranteed the regulated self-serve margin of four to 5.5 cents; or they may forego the regulated margins in favour of compensation outlined in their contracts; or they may, with the wholesaler’s agreement, enter into a new contract.

Retailers have until Aug. 31 to make their choice. Until then, the provisions of their current contract apply. If a retailer does not indicate a choice, the retailer will continue with its current supplier contract and receive the regulated margin.

Mr. Muir said the regulatory system will be reviewed after one year to ensure it is meeting its goals. Additional information, including a map of the zones, regulations and the industry information bulletin, are available on the Service Nova Scotia and Municipal Relations website at www.gov.ns.ca/snsmr/petroleum .

FOR BROADCAST USE:

Nova Scotians can look forward to more stabilized gasoline prices as retail gasoline price regulation takes effect in the province July 1st.

Jamie Muir, Minister of Service Nova Scotia and Municipal Relations, says regulating gas prices will protect consumers from the volatile ups and downs of the gas market, and give independent retailers a better chance to make a fair profit.

The price posted at gasoline stations across the province starting at 12:01 on Saturday mornings will be in effect for two weeks. The New York Harbor spot price will be the benchmark. Wholesale and retail margins, as well as transportation allowances, will be added to determine the pre-tax price.

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Media Contact:

David MacNeil
Service N.S. and Municipal Relations 902 424-6336 E-mail: