I WAS AMAZED to hear on the radio the other day that since the introduction of gas regulation in Nova Scotia, we have moved from a price that was consistently above the national average to a price that is consistently below the national average. I was amazed because prior to this, no one ever suggested that gas regulation in Nova Scotia saves the consumer money.
The government did not say this when it campaigned on the measure during the 2006 election. The government consultants did not say it at their one-year review or in their two-year review. In fact, the premier was very clear during the last election that regulation would make gas more expensive in Nova Scotia. The consultants hired by the government confirmed this assertion and pegged that added cost at about half a cent per litre.
Of course, the consultants did not calculate the total cost to Nova Scotians since the date regulation was introduced, nor did they comment on the added tax revenue that a higher price would deliver to the province (recall, while gas taxes are fixed, the HST applies to gasoline as well, so for every 10 cents extra you pay for gas, the government gets an added 01.3 cents). We did that calculation: As of last Friday, that total added cost is just over $20 million and counting.
So, if we are paying all of this extra money, how is it that our gas prices are now consistently below the national average? Well, in the first instance, they are not.
If you include taxes, Nova Scotians paid lower average prices than other Canadians did in only three of 52 weeks in 2008. That performance has been better so far in 2009, with our prices being lower than the national average in nine of the 21 weeks.
But what about the confident assertion being made that our prices are consistently lower than the national average? Well, to get there, you need to make one small adjustment to the price you are comparing. You need to exclude the taxes we pay. Now, I don’t know about you, but when I pull up to the pump, the price on the gauge is taxes-in, so comparing gas prices taxes-out seems a little off to me.
Nevertheless, it is indeed possible to numerically demonstrate that Nova Scotian gas prices were consistently below the Canadian average since early 2008 if you exclude taxes. Of course, regulation started in 2006, not 2008, but let’s not quibble about that.
So, how did this miracle of lower average prices, excluding taxes, come about in Nova Scotia through gas regulation? Well, once again, the simple answer is, it didn’t. Gas prices and gas price regulation in Nova Scotia have nothing to do with our sudden excluding-tax “advantage” over the rest of the country.
Instead, we need to look outside our province for the culprit. What happened nationally in early 2008 that may have impacted this comparison? Well, a carbon tax was introduced in British Columbia that drove up the price of gasoline in that province, and which, by the way, has an escalator clause in it so the tax, and B.C.’s price of gasoline, gets higher every year. And to add insult to complexity, because this tax is applied at the production stage, the nationally reported “without tax” figures actually include the B.C. carbon tax — go figure.
So, to restate simply: One reason the national average without tax is higher than ours is because gas is more expensive in B.C., and has been since early 2008. There are other reasons, again having nothing to do with regulation in Nova Scotia, but I have limited space here.
More to the point: The price you actually pay is, was and will continue to be higher than what your sister in Alberta or your cousin in Moose Jaw pays. That will not change as long as gas regulation remains in place and Nova Scotia gas taxes continue to be among the highest in the country.
Charles Cirtwill is the executive vice-president of the Atlantic Institute for Market Studies (
www.AIMS.ca), a non-partisan, independent public policy think tank in Halifax.