EAST HANTS – Gas regulation is doing what it was meant to for Nova Scotian motorists, keeping gas prices stable instead of suddenly spiking on a daily basis in an unregulated environment, two East Hants MLAs say.
Transportation and Infrastructure Renewal Minister Brooke Taylor, the MLA for Colchester-Musquodoboit Valley, and Hants East New Democrat MLA, John MacDonell, both question a report by the Atlantic Institute for Market Studies (AIMS) that says gas regulation has injected close to $1.5 million in sales tax revenue to the pocketbooks of the provincial government.
In the report, AIMS says based on the government’s own figures, they make $700,000 a year off gas regulation. But they believe it is much higher, says AIMS executive vice-president, Charles Cirtwill. AIMS’ website, www.aims.ca, has a gas gauge tracker on it.
“For the public tracking gauge, we have used the lower figure to be as conservative as possible in the estimated cost,” Cirtwill said. “However, the province isn’t the big winner in all this. The big winner is the industry, they make more money, and the government gets blamed. To Nova Scotia’s credit they have always said regulation was going to cost the consumer more. They felt the other potential benefits were worth the cost. Of course, the other benefits, other than knowing the exact day when prices will rise or fall, have not materialized.”
Taylor said the numbers indicated in report by the Halifax-based think-tank are being disputed by Service Nova Scotia and Municipal Relations.
“Our main objective, when we brought regulation in as a government, was basically to provide some of the rural communities that had service stations an opportunity to sustain,” the Conservative said. “We wanted to provide the motorists with some stability in terms of pricing. Nobody ever said it would lead to lower prices, but more recently I’m concerned too with AIMS’ study and the conclusions that they reached. I want to emphasize that some of their findings are being disputed.”
MacDonell said his party did their own study taking Nova Scotia, New Brunswick, oil-rich Alberta and Ontario. The latter two are unregulated. The end result showed that with gas regulation, during the same period from Dec. 28, 2008 to Jan. 8, Nova Scotia was the lowest of them all on average, contradicting the AIMS report.
“It was never sold as a way to get lower prices,” MacDonell said. “It’s done what it was meant to. This evidence shows that we don’t seem to be so badly served, in particular, compared to an unregulated market. It has helped keep rural stations competitive. In the past, if gas took a sudden spike, we could wake up and see a huge hike at the pumps and wish we had filled up the night before.”
Regulation has come to the forefront since its inception in Nova Scotia on July 1, 2006. To help consumers see the exact cost to them, AIMS has setup a gas gauge tracker on their website,
“A University of Waterloo study shows prices are no more stable and retailers are no less vulnerable to closing,” Cirtwill said. “Our analysis supports those findings and suggests that price spikes (high margins) are both higher and more frequent under regulation and that price drops (low margins) are less frequent and smaller.
“So, in plain language, regulation, on average, sets and keeps the price higher than it would otherwise be.”
Cirtwill said consumers in this province have paid out $17.8 million since its inception.
What does this mean to residents in East Hants and across the province?
“Simple – you pay more for gas,” Cirtwill added. “And, unlike in New Brunswick, you don’t get to offset the increased cost of regulation with a larger reduction in gas taxes. Nova Scotia has both relatively high gas taxes and the added cost of regulation.”
He added his group’s analysis shows the unregulated environment was better for consumers and no worse for the industry. He added that, unfortunately, the intended benefits (other than knowing the exact day when prices will rise or fall) of that increased expense, have not materialized and seem unlikely to do so now.
“For the government, it can be argued that regulation is actually better,” Cirtwill said. “They get increased tax revenues, get to appear to be taking action, and have only marginally more public anger focused on them when the prices go up. When prices spike in a regulated environment, oil companies now essentially get a free ride and the government has to do the explaining. In an unregulated environment, both groups get called on the carpet but the government does not get away scot-free.”
But what seems to get Taylor and MacDonell even more upset is the fact there doesn’t seem to be any correlation between world crude prices and the price at the pumps.
“If the price of crude goes down, we expect the price at the pumps to go down,” Taylor added. “That’s disheartening and is upsetting to motorists and consumers alike. It’s a bone of contention. We need a clearer explanation.”
MacDonell agrees.
“It’s disturbing when you see world prices go down, yet we see prices go up,” he said.