Petroleum Pricing in Nova Scotia
Encyclopedia
Petroleum pricing in Nova Scotia is based on the Petroleum Products Pricing Act which governs the wholesale and minimum and maximum price of gasoline
and diesel fuels that are authorised in Nova Scotia
.
, the Premier of Nova Scotia announced in May of 2006 that petroleum prices will be regulated, beginning on 1 July 2006, two weeks following New Brunswick
's announcement of doing the same.
as a benchmark in Canadian funds. This plus a 6 cent per litre wholesale margin, plus a transportation allowance of 0.3 to 2 cents per litre, and a retail margin of 4 to 5.5 cents per litre (or to a maximum of 7.5 cents per litre for full-serve gasoline).
. Every Friday, prices may go up or down or stay the same, depending on the market price over the past 7 days.
The interrupter is based on a formula that will determine whether the market prices of fuels have changed enough to warrant a price change . This “interrupter” formula will run every second Wednesday beginning 19 July 2006.
For the interrupter formula to trigger a price change, a 5 day average NYMEX spot price from the last price change to the current date, will be calculated. If this new average NYMEX spot price changes by ±4 cents per litre over the last NYMEX spot price average, used to set the scheduled price change, the pump price may be adjusted using the new average NYMEX spot price as the baseline. If the interrupter is not triggered on the interruption date, the current pump price will continue until the next price change the following Thursday.
In extreme circumstances, precipitated by a weather or perhaps a geopolitical event, a catastrophic interrupter could initiated whereby international product prices change by significant amounts, say ±15 cents per litre. This interrupter would be initiated on the day of the price change or the next day when rack prices in Nova Scotia would change.
, from the public at large. When this was first brought about many including in the New Democratic Party
and the Retail Gasoline Dealers Association of Nova Scotia wanted a system similar to Prince Edward Island for lower prices. The ones opposing this scheme argued that the PEI system not only keeps prices higher but it does not allow for competition. The lower gasoline prices are a result of PEI's not charging the Provincial Sales Tax of 10% unlike in Nova Scotia where the Harmonized Sales Tax
of 15% is charged. In New Brunswick
, the HST is also charged, but they set a maximum price for most of entire province (no zones) without setting a minimum price. As a price comparison, on 1 July 2006, the same day Nova Scotia started its system, the maximum price in New Brunswick was 112.4 cents per litre for regular self serve compared to Nova Scotia's minimum price of 113.3 to 115.2 (depending on the zone) cents per litre.
Gasoline
Gasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...
and diesel fuels that are authorised in Nova Scotia
Nova Scotia
Nova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the...
.
History
In the spring of 2004, both consumers and retailers (the Retail Gasoline Dealers Association of Nova Scotia) complained about the rising price of gasoline and diesel fuel, and the closure of rural gas stations due to low volumes and low margins. After appearing before an all party committee on petroleum pricing, the Nova Scotia legislature passed Bill 79 The Nova Scotia Petroleum Products Pricing Act. After a year of not proclaiming it law, Rodney MacDonaldRodney MacDonald
Rodney Joseph MacDonald is a Canadian politician, educator and musician who served as the 26th Premier of Nova Scotia from 2006 to 2009 and as MLA for the riding of Inverness in the Nova Scotia House of Assembly from 1999 to 2009....
, the Premier of Nova Scotia announced in May of 2006 that petroleum prices will be regulated, beginning on 1 July 2006, two weeks following New Brunswick
New Brunswick
New Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area...
's announcement of doing the same.
Price Structure
The price of gasoline and diesel fuel are based on the price on the New York Mercantile ExchangeNew York Mercantile Exchange
The New York Mercantile Exchange is the world's largest physical commodity futures exchange. It is located at One North End Avenue in the World Financial Center in the Battery Park City section of Manhattan, New York City...
as a benchmark in Canadian funds. This plus a 6 cent per litre wholesale margin, plus a transportation allowance of 0.3 to 2 cents per litre, and a retail margin of 4 to 5.5 cents per litre (or to a maximum of 7.5 cents per litre for full-serve gasoline).
Zones
The transportation of the product is calculated based on six zones in Nova Scotia:- Zone 1 - Halifax Regional Municipality, Hants CountyHants County, Nova ScotiaHants County is a county in the Canadian province of Nova Scotia which was the home of Thomas Chandler Haliburton, Alden Nowlan and Noel Doiron. The county of Hants was created June 17, 1781, and consisted of the townships of Windsor, Falmouth and Newport...
and southern Colchester CountyColchester County, Nova ScotiaColchester County is a county in the Canadian province of Nova Scotia.-History:The appellation Colchester was applied in 1780 to the district previously called "Cobequid," and was derived from the town of Colchester in Essex...
- 0.3 cents per litre - Zone 2 - LunenburgLunenburg County, Nova ScotiaLunenburg County is a county located on the South Shore of the Canadian province of Nova Scotia, It ranges from Hubbards to the east and Vogler's Cove to the west.-History:...
, KingsKings County, Nova ScotiaKings County is a county in the Canadian province of Nova Scotia.Kings County is located in central Nova Scotia on the shore of the Bay of Fundy with its northeastern part also forming the western shore of the Minas Basin....
and Eastern AnnapolisAnnapolis County, Nova ScotiaAnnapolis County is a county in the Canadian province of Nova Scotia located in the western part of the province on the Bay of Fundy. The county seat is Annapolis Royal.-History:...
counties, - 0.7 cents per litre. - Zone 3 - Western Annapolis, DigbyDigby County, Nova ScotiaDigby County is a county in the Canadian province of Nova Scotia.Taking its name from the Township of Digby , which had been named in honour of Rear Admiral Robert Digby who dispatched HMS Atlanta to convey loyalists from New York City in the spring of 1783 to Conway, which became known as Digby,...
, YarmouthYarmouth County, Nova ScotiaFor the ship built in Yarmouth County, see County of YarmouthYarmouth County is a rural county in the Canadian province of Nova Scotia. It has both traditional Anglo-Scottish and Acadian French culture as well as significant inland wilderness areas, including over 365 lakes and several major rivers...
, ShelburneShelburne County, Nova ScotiaShelburne County is a county in the Canadian province of Nova Scotia.-History:Shelburne County was founded in 1784 shortly following the influx of Loyalist settlers evacuated from the newly independent United States of America...
, and Queens counties - 1.2 cents per litre. - Zone 4 - Cumberland CountyCumberland County, Nova ScotiaCumberland County is a county in the Canadian province of Nova Scotia.-History:The name Cumberland was applied by Lieutenant-Colonel Robert Monckton to the captured Fort Beauséjour on June 18, 1755 in honour of the third son of King George II, William Augustus, Duke of Cumberland, victor at...
- 1.2 cents per litre - Zone 5 - Northern Colchester, PictouPictou County, Nova ScotiaPictou County is a county in the Canadian province of Nova Scotia. It was established in 1835, and was formerly a part of Halifax County from 1759 to 1835. It had a population of 46,513 people in 2006, which represents a decline of 6.3 percent from 1991. It is the sixth most populous county in Nova...
, AntigonishAntigonish County, Nova ScotiaAntigonish County, Nova Scotia is a county in the Canadian province of Nova Scotia. It is located in northern Nova Scotia on the Northumberland Strait and its county seat is the town of Antigonish.-History:...
, and GuysboroughGuysborough, Nova ScotiaGuysborough is an unincorporated Canadian community in Guysborough County, Nova Scotia.Located on the western shore of Chedabucto Bay, fronting Guysborough Harbour, it is the administrative seat of the Guysborough municipal district....
counties, and the Port Hastings - Port HawkesburyPort Hawkesbury, Nova Scotia-Historical residents:*Henry Nicholas Paint , member of Parliament for Richmond county, merchant and land owner. His family received land grants at Belle Vue on the Strait of Canso in 1817 and at Point Tupper in 1863, and did much to develop the local communities in the area.*Arthur John Langley ...
area of Inverness CountyInverness County, Nova ScotiaInverness County is a county in the Canadian province of Nova Scotia. Its territory is almost contiguous with the Municipality of Inverness County, which only excludes the town of Port Hawkesbury and First Nation reserves.-History:...
- 2 cents per litre. - Zone 6 - the remainder of Inverness County, Richmond CountyRichmond County, Nova ScotiaRichmond County is a county in the Canadian province of Nova Scotia.-History:Named in honour of Sir Charles Lennox, 4th Duke of Richmond and Lennox, who was Governor General of British North America 1818-1819, Richmond County was created in 1835....
, Victoria CountyVictoria County, Nova ScotiaVictoria County is a county in the Canadian province of Nova Scotia.The shire town and largest municipality is the village of Baddeck.-History:Named after Queen Victoria, it was established by statute in 1851...
, and Cape Breton Regional Municipality - 2 cents per litre.
Taxes
- Federal Excise Tax - 10 cents for Gasoline 6 Cents for Diesel
- Nova Scotia Road Tax - 15 cents
- Harmonized Sales TaxHarmonized Sales TaxThe Harmonized Sales Tax is the name used in Canada to describe the combination of the federal Goods and Services Tax and the regional Provincial Sales Tax into a single value added sales tax in five of the ten Canadian provinces: Ontario, New Brunswick, Newfoundland and Labrador, British...
15% of the total of the above (about 3 cents per 20 cents per litre)
Notice
There is no notice of change in prices, unlike in Prince Edward IslandPrince Edward Island
Prince Edward Island is a Canadian province consisting of an island of the same name, as well as other islands. The maritime province is the smallest in the nation in both land area and population...
. Every Friday, prices may go up or down or stay the same, depending on the market price over the past 7 days.
Interrupter and Price Changes
Scheduled price changes occur every second Thursday starting 13 July 2006.The interrupter is based on a formula that will determine whether the market prices of fuels have changed enough to warrant a price change . This “interrupter” formula will run every second Wednesday beginning 19 July 2006.
For the interrupter formula to trigger a price change, a 5 day average NYMEX spot price from the last price change to the current date, will be calculated. If this new average NYMEX spot price changes by ±4 cents per litre over the last NYMEX spot price average, used to set the scheduled price change, the pump price may be adjusted using the new average NYMEX spot price as the baseline. If the interrupter is not triggered on the interruption date, the current pump price will continue until the next price change the following Thursday.
In extreme circumstances, precipitated by a weather or perhaps a geopolitical event, a catastrophic interrupter could initiated whereby international product prices change by significant amounts, say ±15 cents per litre. This interrupter would be initiated on the day of the price change or the next day when rack prices in Nova Scotia would change.
Controversy
Many critics argue that this method of controlling the price of petroleum products is not in the public interest; these critics include the Liberal Party of Nova Scotia, the Nova Scotia Chambers of Commerce, and vocal critics, mainly in the Halifax Regional MunicipalityHalifax Regional Municipality, Nova Scotia
Halifax Regional Municipality is the capital of the province of Nova Scotia, Canada. The Regional Municipality had a 2006 census population of 372,679, while the metropolitan area had a 2010 estimated population of 403,188, and the urban area of Halifax had a population of 282,924...
, from the public at large. When this was first brought about many including in the New Democratic Party
Nova Scotia New Democratic Party
The Nova Scotia New Democratic Party is a social-democratic provincial party in Nova Scotia, Canada. It is aligned with the federal New Democratic Party . Originally founded as the Co-operative Commonwealth Federation in 1932, it became the New Democratic Party in 1961. It became the governing...
and the Retail Gasoline Dealers Association of Nova Scotia wanted a system similar to Prince Edward Island for lower prices. The ones opposing this scheme argued that the PEI system not only keeps prices higher but it does not allow for competition. The lower gasoline prices are a result of PEI's not charging the Provincial Sales Tax of 10% unlike in Nova Scotia where the Harmonized Sales Tax
Harmonized Sales Tax
The Harmonized Sales Tax is the name used in Canada to describe the combination of the federal Goods and Services Tax and the regional Provincial Sales Tax into a single value added sales tax in five of the ten Canadian provinces: Ontario, New Brunswick, Newfoundland and Labrador, British...
of 15% is charged. In New Brunswick
New Brunswick
New Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area...
, the HST is also charged, but they set a maximum price for most of entire province (no zones) without setting a minimum price. As a price comparison, on 1 July 2006, the same day Nova Scotia started its system, the maximum price in New Brunswick was 112.4 cents per litre for regular self serve compared to Nova Scotia's minimum price of 113.3 to 115.2 (depending on the zone) cents per litre.