Gas price regulations don't work, says critic
Should New Brunswick scrap its fuel price regulations?
With the cost for regular gasoline inching close to $2 a litre, Don Monahan thinks so.
The Progressive Conservative opposition finance critic says the regulations, 20 years old now, have done nothing to help consumers at the pump.
He favours big tax cuts over tinkering with margins, as the governing provincial Liberals have done.
"We need to open up the fuel system in New Brunswick, similar to what other provinces do," said Monahan, the MLA for Arcadia-Butternut Valley-Maple Hills and a leadership hopeful for his party.
"This fuel situation was brought in years ago when there was a lot of volatility in the marketplace, and prices were jumping on a daily basis. I don't believe we see that right now anymore. Things have adjusted. They are a little more steady, and I believe that government shouldn't be involved in a free market. Government is there to help, to provide programs, and assist the vulnerable and the population. I don't think we should be trying to drive or be involved in business. So, get rid of the price setting mechanism altogether."
The politician points to the regulator's decision to reverse the Holt Liberal government's attempt last year to erase the cost of federal clean fuel rules from gas prices.
The New Brunswick Energy and Utilities Board's order earlier this month helped push the maximum price for regular gas over $2 per litre for the first time this year just before the May long weekend. Many gas stations, however, kept their regular price just under that distressing $2 mark.
The fiddling with the maximum price calculation added close to an extra four cents a litre to the cost of regular unleaded gas overnight.
In a province where many adults drive great distances and public transit is spotty, the joke is that people are seeing their money evaporate faster than an open tank of gas.
Monahan said a better way to create savings for consumers is to cut gas taxes.
Prices have jumped over the last few months thanks to the war in Iran, which has caused a global fuel shortage. Launched by U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu in late February, the war's spillover has pushed gas prices in North America up between 30 and 50 per cent.
The high prices convinced Prime Minister Mark Carney last month to temporarily suspend the federal fuel excise tax on gasoline and diesel across Canada, a move that cut gas prices by 10 cents at the pumps.
Monahan said more could be done.
He wants the Holt Liberal government to cut the provincial portion of HST on gas, the equivalent of 10 per cent of the cost of every fill up (the remaining five per cent of the harmonized sales tax goes to Ottawa).
The Holt government, however, says such a radical step would rob the provincial treasury of funds needed for important public services, such as health care and education.
It has been making changes at the edges of fuel prices, trying to drive down the costs. During a recent question period, Energy Minister René Legacy defended the government's measures, such as amending regulations in December. The new rules mandated that blended fuel - the kind with 10 per cent ethanol and 90 per cent gasoline - be used to determine the benchmark price for regular gasoline.
That change pushed prices slightly down, as did the government's decision to eliminate the carbon adjuster earlier that month.
"We provided immediate relief, and gas prices went down," Legacy thundered. "When members opposite were crying and screaming for us not to touch the cost of carbon adjustor, we provided immediate relief. We now have a transparent system that is based on Canadian pricing as opposed to Californian pricing, which we've been asking for."
Brunswick News asked the Department of Finance for the purpose of gas price regulations and whether they'd saved New Brunswickers any money.
A spokesman basically said not really.
The regulations ensure that there aren't as many sudden price spikes, but over time, the differences even out. If you drive every day and must routinely fill up your tank, you're not getting ahead.
The real question is whether the regulations, first introduced in 2006, make the industry as a whole more competitive, helping to drive prices down.
"The purpose of gas regulation is to provide the lowest price possible without jeopardizing the continuity of supply," David Kelly wrote in an email. "Recent studies have shown that prices in New Brunswick generally reflect market prices without the volatility of daily price changes."
The finance minister underlined that gas price regulations were here to stay.
"De-regulation is not something our government is considering at the moment," Legacy said in a prepared statement to Brunswick News.
"Our priority is, and always will be, delivering real affordability for New Brunswickers. We provided relief by amending the Petroleum Products Pricing Act just before Christmas - to this day saving consumers 10 cents per litre at the pumps. The removal of the carbon adjustor - an election commitment - also helped keep fuel prices lower than they would have been without its removal."
Legacy had an unlikely ally in David Coon, leader of the small opposition Green party, who told reporters he didn't like the Conservative pitch.
He argued that gas regulations helped protect small mom and pop gas stations.
"It's taken out how volatile prices were in the past, and it diminishes the ability of the more powerful and moneyed gas chains to drive small gas businesses out of business. That's my concern, especially in rural New Brunswick."
Coon said forgiving the provincial portion of HST was hugely irresponsible, pointing out it would deprive the government of badly needed funds.
"That's essential to pay for our public services, for health care, for long-term care and so on," he said.
Monahan said that with the overall price of gas much higher, the Liberals could shave off the provincial portion of HST and likely still take in a decent amount of revenue.
But Coon countered that any extra revenues should be used to lower the record $1.4-billion deficit. That overspending is the equivalent of 10 per cent of the entire provincial budget.
Asked how much the provincial government had budgeted for revenues from the provincial portion of HST on gas, the spokesman offered a surprising reply.
The government doesn't know.
"Government does not budget at that level of detail for the HST," Kelly wrote.
