Petroleum products price regulation:
OVERVIEW:

New Brunswick began to regulate the maximum price of certain petroleum products on July 1, 2006.  The purpose of regulation is to reduce daily volatility in retail petroleum prices, while ensuring that New Brunswickers pay the lowest possible price without jeopardizing the supply of products.

Review of the Price Interruption Formula >>

REGULATED PRODUCTS:

BASIC REGULATION FACTS:

• The New Brunswick Energy and Utilities Board administers the maximum price regulation.
• Maximum prices are entirely set by formula (see below).  The Board does not exercise any discretion in the setting of maximum prices.
• The maximum prices for regulated products are normally published every Thursday morning.  On rare occasions when market changes are very large, the Board may set maximums on another day of the week.
• Retailers are required by law to display their prices on clearly visible signage.
• Retailers are not required to sell at the maximum regulated price.  They may compete at lower prices provided they do not exceed the maximum price for that product.  There are no minimum prices (unlike some other provinces).  Discounts and promotions are freely permitted.

This section provides greater detail about how maximum regulated prices are determined by the N.B. Energy and Utilities Board.  For the sake of simplicity, this section reviews the formula for regular grade gasoline only.  The methods of setting maximums for diesel, furnace oil and propane are slightly different.

• A weekly “benchmark” price is determined for regular grade gasoline as follows: (1) determine the higher of a) the average of the daily high and low for conventional gasoline  OR b) the average of the daily high and low for E10 (10% Ethanol and 90%CBOB) from Wednesday to Tuesday as traded in New York Harbour (2) convert gallons to litres; (3) convert US dollars to Canadian dollars (4) use Friday’s price as a proxy for Saturday and Sunday; (5) derive an average of the seven days results;
  
• To this benchmark, add a “wholesale margin” of 6 cents per litre;
• Add federal excise tax, provincial fuel tax and HST;
• Add a “retail margin” of 5.9 cents per litre for self-serve (or add 8.4 cents per litre for “full service” pumps);
• Add HST to the retail margin;
• This results in the Maximum Retail price;
  
• Add up to 2.5 cents per litre for actual delivery costs (5 cents in Grand Manan), plus applicable HST.

FREQUENTLY ASKED QUESTIONS:

• Q: What if I believe that I am being overcharged for fuel?  A: Save your receipt, as it will contain details of the date and price per unit of product. Contact the Energy and Utilities Board at
  (506) 658-2504 or 1-866-766-2782 (toll free) to register a complaint.

• Q: Why does the price of gas behave differently at times than the price of crude oil?  A: Gasoline prices do not always change in the same direction or rate as the price of crude oil.  This is an economic fact and is not a result of the regulated formula.  The price of gasoline is determined by a different set of market factors than for crude oil.  In the long term, a lower price of crude has an impact on petroleum prices, but crude oil is not the only cost factor in refined products.
  
  
• Q: How do I find New York Harbour prices to calculate the benchmark price?  A: The Energy and Utilities Board subscribes to a reporting service (“Platts”) that gives daily highs and lows.  By contract, this data is confidential.  There are sources of information on the World Wide Web that provide daily commodity prices, but they may not be as up to date or as detailed as Platts data.
  
  
• Q:  What other provinces regulate the prices of petroleum products?   A:  Quebec, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.  Each province has different rules and schedules for price regulation. 

New Brunswick Energy and Utilities Board - Current maximum fuel prices >>

EXTERNAL LINKS:

MJ Ervin & Associates Weekly Pump Price Survey >>

Natural Resources Canada - Petroleum Products Information >>

Petroleum Basics - U.S. Department of Energy >>

New Brunswick Energy and Utilities Board >>

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