A local economist is weighing in on the renewed debate over whether Nova Scotia should deregulate gas prices.
The head of the Atlantic Institute for Market Studies said regulation leads to bigger profits for gas stations, oil companies and the provincial government.
“It builds in a margin that’s based on a predicted profit around what they’re required to get in terms of being able to cover their costs and return investments to their shareholders,” Charles Cirtwell told News 95.7. “The only difference is the person doing the calculation is a government bureaucrat instead of the folks at the various gas station operations.”
One consumer advocate said regulation is protecting Nova Scotians from paying for maintenances costs from oil refineries.
“Big oil will certainly try to get consumers to pay for it,” George Murphy told the Rick Howe Show, Thursday. “This is a case, directly, where the regulation of fuel prices covers the consumer. Thank God, in particular in this case, for regulation being in place, consumers will not be paying for any extra and added charges that refineries are going to try to pass on.”
Cirtwell disagreed with Murphy’s assessment.
“Here’s the problem,” Cirtwell argued. “The government bureaucrat actually has a mandate to put in a cushion, so they actually increase the profit on a go-forward basis for everybody because they have allowed for fluctuations in the market. They’re trying to predict what will happen next Thursday, so as a result they’re always charging us more than should otherwise be the case.”
As well, he said regulation hasn’t prevented independent gas stations from closing as it was intended to do when it was implemented six years ago.
“The trend in closing local gas stations, rural and urban by the way, didn’t slow until all the marginal operators were pretty much gone,” he said.
Speaking to consumers who flocked to the gas pumps after Thursday night’s 6.7 cent drop in price, there is mixed support for regulation.