Friday, March 27, 2009

Gouged at the Pumps? you want to believe it...

$155 million. $155 million and counting. That is how much gas price regulation has cost you, your friends, your neighbours and your guests here in Atlantic Canada as of February 1, 2009, Even if you were a clever consumer and bought your gas Thursday when it was going to be more expensive Friday, or waited until Friday when Thursday was too high, the harsh reality is, you paid more than you should have on either day.
When you hear spin doctors like IRAC or the Gas Dealers Association talk to you about price stability or predictability, keeping rural retailers in business, or maintaining industry infrastructure; just remember that the only thing they know for sure is that you, the consumer, are paying more for gas than you would without regulation. Some commentators are honest with you about that, others will obfuscate, but the bottom line is, you are paying for gas price regulation.
Now, with the launch of the AIMS Guzzling Gas Regulation Gauge, you can see just how much more you are paying. As those dollars keep racking up on the guzzling gauges, the question only you can answer is – is it worth it?
Industry experts have estimated that gas price regulation normally costs consumers from 1.0 to 1.5 cents a litre. Even using (where available) government’s own estimate of the per litre cost of gas regulation we see that the cost of regulation is 0.51 cents a litre in Nova Scotia, approximately 1.31 cents a litre in Newfoundland and Labrador, 0.31 cents a litre in New Brunswick, and 1.54 cent a litre in PEI.
And that is only the added cost per litre BEFORE sales taxes. So for every $1.00 more we pay for gas, the government gets a bonus of 13 to 15.5 cents. The global market takes care of big oil, the regulations supposedly protect retailers and wholesalers, and the bump in price rewards government, everybody wins, except us of course.
So how much more are we paying? Using Statistics Canada's estimates for the volume of gas sold in each province, as of February 1st, 2009 Atlantic Canadians have paid over $155 million more for gasoline because of price regulation. For New Brunswickers, it's $9.4 million extra since July 1, 2006 when regulation came into effect. In Nova Scotia, where regulation started that same day, consumers have paid $17.8 million more. In Newfoundland and Labrador the tally is more than $65.2 million since October of 2001. And our long suffering friends in PEI, who have lived with gas price regulation for 18 years, since February 1st of 1991, it's an extra $63.0 million.
Every litre of gas that is purchased increases that total - and the AIMS Money Guzzling Gas Regulation Gauge is tracking every penny So, while gas price regulation remains in effect, everyone can now keep an eye on just how much price regulation costs you and me and everyone who buys a drop of gasoline in the Atlantic Provinces. Come back later today, tomorrow or next week and see how much more you have spent then you could have. We feel your pain.
To read a more detailed explanation of gasoline price regulation and the calculations follow this link to "What’s Missing from Your Wallet", an AIMS Backgrounder on the issue. The above article is from Atlantic Institute of Market Studies with some minor amendments...


Anonymous said...

It would have been nice if you had been able to attend the IRAC consideration meeting to see and hear their reaction to this.

Previous Killam Shareholder said...

While it is commendable that Tim is speaking out against IRAC's lack of action when it comes to the pumps, I question his reasoning. Afterall, someone who has 3 or 4 porches has little worry about the price of gas.

That being said, Tim would have ownership of a lot of vehicles through the APM group which he fuels.

Or is it the fact he is a shareholder in Killam Properties? A local apartment rental company also governed by IRAC.

Full disclosure please Tim.