Description and Background
The Province of New Brunswick will perform a comprehensive review of the Petroleum Products Pricing Act and Regulations for the purpose of ensuring its continued effectiveness in achieving the objectives of petroleum price stability, while ensuring the lowest possible price to the consumer without jeopardizing the continuity of supply.
Although there was a third-party review of the petroleum price regulatory structure six months after it came into effect, there has never been a comprehensive long term retrospective. The original wholesale and retail margins remained unchanged until June 2011, when the EUB amended the retail margin for motor fuels by 0.9 cents per litre. In the Energy and Utilities Board’s last two margin reviews (2008 and 2011) a lack of evidence was cited in denying most of the margin increases that had been sought by wholesalers and retailers.
The New Brunswick petroleum market has been affected by a number of influences. Natural gas has displaced roughly 5,000 former consumers of home heating oil. Retail outlets continue an evolution away from the traditional corner gas station towards large, multi-product retail operations. Volatile prices have become the norm. There are federally-mandated renewable fuels in gasoline, and in 2013, in diesel and heating oil. New vehicle technology, including electric and high-efficiency vehicles, will bring non-petroleum fuel choices and fundamentally alter the nature of petroleum distribution.
Now that the petroleum price regulatory structure has been in existence for five years, there is an opportunity to re-examine all of its aspects to ensure that it continues to serve its policy objectives for now and the future. The desired outcome would be a simpler and rationalized framework for the regulation of petroleum product pricing.
Key Objectives Served by this Action
Low and Stable Energy Prices – Although the outcome of a comprehensive review cannot be predicted, a clear objective will be to ensure that the overall regulatory framework continues to serve New Brunswick petroleum consumers with the lowest possible price, while maintaining reasonable margins for the wholesale and retail industry that supplies the market.
Effective Regulation – A comprehensive review may result in recommendations for greater effectiveness in the regulatory framework and continued relevance as petroleum markets continue to evolve.