Oil pricing tag wars are a sight to see yet it translates to inconsistent price alterations. In March 2011, gas prices rose up by almost 19% after a 16% bump from February 2010-2011. Net sales of gasoline, however, went from about 38,500,000 liters to 39,700,000 from 2005-2009 (Statistics Canada, 2014). Collusion of oil marketers and cartels have resulted in volatile gas prices in most Canadian cities. These cartels work together to maximize their profits at the expense of the consumer.
A slight change in price may spark a tremendous ripple effect devastating the customers who cannot keep up with the fluctuating prices. A single gas station can set a very high price on gas and within no time all the other similar and competing gas stations within that area adjust their gas prices. They do so in order to be in line with or even higher than the initial station to hike the gas prices (Doern, 2005). Eventually, the trend catches on around that region and subsequently, spreads across the whole country at a very fast rate maiming the poor consumers who fall victims of unhealthy prices.
The arms of the Federal Government of Canada can only constitutionally stretch far enough to regulate gasoline prices in an emergency. However, that is not the case in some places. Quebec and the Atlantic provinces are perfect examples of Canadian provinces that exercise the right to regulating gas prices. Minimum prices in Quebec province are set once every week with information on its estimate of the cost of acquiring the gas (Natural Resources Canada, 2013). The prices comprise transport costs, and usually minimum retail margin gets included by the regulating body, the Regie de l’energize du The Quebec. The maximum gas price in New Brunswick gets set by the Energy and Utilities Board every Thursday following a special formula that links the price to gas prices at the New York Harbor. It also includes allowances made such as retail margins. However, it does not set the minimum prices. The constitution allows the exercise of the mandate by Canadian provinces and territories in regulating prices in order to reduce price volatility and protect small independent retailers from unscrupulous prices (acute high up or down price changes).
In Newfound, Labrador, Nova Scotia and Prince Edward Islands the prices are kept on a short leash. Newfound, Labrador and Nova Scotia set common gas prices by using spot prices at the New York Harbor. The wholesale prices get set at higher than the benchmark, and an allowance on transportation gets included in the price dependent on the zone set for distribution. Retailers can only maintain a price margin of five cents for every liter and cannot sell below a price margin of four cents for each liter. The Island Regulatory Appeals Commission, In Prince Edward Islands, determines the entire gas price. Practically, gas prices at the New York Harbor contribute to bringing changes in the regulated price that get averaged after a fortnight. The new prices get publicly announced on the beginning and middle of every month. Jack Layton, an aspirant in the 2011 elections campaign, pledged that before implementing oil price regulation, he would establish an inquiry to investigate the alleged collusion by oil companies (CBC News, 2006). The oil prices are closely monitored and regulated from without the business premise (Smith, 2011).
The oil pricing wounds were yet to heal, and various provinces turned to new regulations and amendments for safety. Nova Scotia implemented a regulation on the province’s gas prices. The Prime Minister believed the regulation would stabilize gas prices and ensure that the retailers receive decent profit margins, but would, however, not lower gas prices (Doern, 2005). An amendment in the Canadian constitution that grants the government power to check on the gas prices is instrumental in alleviating pricing concerns. With the demand and supply laws in place, price fixing stations will be criminally charged like the stations in Ontario that corrupted gas prices (CBC News, 2006). That is since the government would be responsible for setting oil prices.
Government regulation and interventions in controlling oil price is a matter of great urgency meant to cushion the consumers from unfair and greed driven gas prices especially in regions with no existing gas price regulation laws.
References
CBC News. (2006, June 28). Gas Price Regulation Comes to N.S. CBC News. Retrieved from http://www.cbc.ca/news/canada/nova-scotia/story/2006/06/28/gas-regulation.html
Doern, G. B. (Ed.). (2005). Canadian Energy Policy and the Struggle for Sustainable Development. Toronto: University of Toronto Press.
Natural Resources Canada (NRC). (2013, November 15). Why Canada Doesn’t Regulate Crude Oil and Fuel Prices. Retrieved from http://www.nrcan.gc.ca/energy/fuel-prices/4601
Smith, J. (2011, April 28). Layton blames Harper for high gas prices. The Star Canada. Retrieved from http://www.thestar.com/news/canada/2011/04/28/layton_blames_harper_for_high_gas_prices.html
Statistics Canada. (2014, July 31). Sales of fuel used for road motor vehicles, by province and territory (Alberta, British Columbia, Yukon, Northwest Territories, Nunavut). Retrieved from http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trade37c-eng.htm