N.B. government review of petroleum price controls shrouded in mystery

The New Brunswick government is declining to release any information about a review it says it has been conducting into whether to lift ceilings placed weekly on petroleum prices in the province by the Energy and Utilities Board.

Last month Premier Blaine Higgs casually mentioned to reporters a review was underway of New Brunswick's 18-year- old practice of setting upper limits on what can be charged to consumers for a variety of petroleum products.

Higgs has hinted many times he does not care for the practice and, while being questioned last month about unfilled vacancies at the Energy and Utilities Board, he mentioned in passing that ending petroleum pricing rules is being looked at.

"You've heard me say this a few times about the role of the EUB and whether we should have regulated pricing and whether we shouldn't," said Higgs. 

"We are doing that analysis now."

Premier Blaine Higgs casually mentioned to reporters in early May that the province was looking into whether petroleum pricing limits in New Brunswick should be eliminated. The government has since declined to give further details (CBC)

However, beyond that statement the government has said little else.

Multiple requests for information about the review have been sent over the last two weeks to both Higg's office and Department of Natural Resources and Energy Development asking what triggered the investigation, who is being consulted about it, and what is being evaluated. They have gone unanswered.

In addition, parties normally involved in energy matters in New Brunswick say if a review is underway they haven't been told anything about it.

"We have not been consulted at all by the New Brunswick government," said Bill Simpkins with the Canadian Fuels Association, an oil industry group that often weighs in on petroleum issues in New Brunswick and appears at petroleum hearings.

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Opposition Leader Susan Holt said she also has heard nothing inside the legislature from the government on the issue and has doubts it is really happening.

However, if it is happening, she said the public should be allowed to know what is under consideration.

"Anytime you are doing something behind closed doors, people assume the worst and for good reason," said Holt.

"They should be able to see what's being said, what's being suggested and they should be able to weigh in on alternatives or options."

All three Maritime provinces have rules around what consumers can be charged for petroleum products, although New Brunswick's system is the least rigid of the three.

In Moncton last week, Costco was selling gasoline for $1.629 per litre. The price was 11 cents below the maximum that could be charged in New Brunswick at the time and more than 12 cents below what would be legal to charge in P.E.I. and Nova Scotia. (Ian Bonnell/CBC)

In both Nova Scotia and Prince Edward Island, regulators set specific prices weekly that have to be offered to the public by retailers, with limited room for competition among outlets.

In Nova Scotia's case, retailers are required to sell gasoline inside a 2.3 cent per litre range that is set by the province's Utilities and Review Board. Retailers in P.E.I. have even less ability to manoeuvre, with 1.2 cents separating legal maximum and minimum prices in that province.

In New Brunswick rules are significantly looser.

Similar to the other two provinces, there is an upper limit set weekly on what consumers can be charged for petroleum products but, unlike its neighbours, New Brunswick has no restriction on retailer competition or discounting.

That one difference often leads to much lower pricing being available in New Brunswick.

New Brunswick drivers will spend about $2.5 billion on gasoline and diesel this year. Since 2006 the province has set upper limits on what consumers can be charged. (Simon Smith/CBC)

Last week in Moncton the big-box discount store Costco was selling gasoline to consumers for just under $1.63 per litre.

The amount was 11 cents below the maximum-price ceiling in force in New Brunswick at the time.

It was also more than 12 cents cheaper than what retailers in both P.E.I. and Nova Scotia were legally allowed to sell gasoline for.

Higgs has not specifically articulated what he does not like about that system except to say that he believes New Brunswick's Energy and Utilities Board spends too much of its time and resources on petroleum regulation, and ending the policy might allow government to shrink the size of the regulator.

"A big part of the EUB workload is in terms of monitoring regulated pricing," Higgs told reporters.

"If we didn't stay on that track with regulated pricing then there wouldn't be a requirement for the same number of members."

Records kept by the New Brunswick Energy and Utilities Board show fewer than four per cent of matters it has dealt with since 2011 have involved petroleum pricing despite claims by Higgs that the regulator is being weighed down by the issue. (Robert Jones/CBC)

That claim appears optimistic.

Records kept by the New Brunswick Energy and Utilities Board show that fewer than four per cent of the regulatory matters it has dealt with since 2011 — 15 of 406 in total — have involved petroleum pricing.

However, there are critics of New Brunswick's practice of setting a weekly ceiling on petroleum prices that have expressed other concerns about the policy.

Gasoline retailers and oil companies have complained that the price ceiling is often not high enough and does not move quickly enough in changing markets.

During periods of rising costs they argue the upper limit on pricing may be a good deal for consumers but can squeeze profit margins down to nothing or below, and force businesses to sell petroleum products at a loss.

In 2021, at a hearing in front of the New Brunswick Energy and Utilities Board, Irving Oil executive Darren Gillis explained the company's concern with the policy.

"Unregulated markets respond as required to ensure supply at reasonable cost recovery levels. This is not the case in regulated markets," Gillis said, in an affadavit submitted to the regulatory body.

"Unlike wholesalers in provinces other than Atlantic Canada and throughout the Atlantic Northeast, our regulated market does not have the flexibility to respond to immediate changes."

Higgs, who is himself a former Irving Oil executive, has not said explicitly that he shares that view but he has his government quietly considering whether to end New Brunswick's practice of setting petroleum price ceilings.