Nova Scotia, like many regions around the world, experiences fluctuations in gasoline and diesel prices. These prices are not arbitrary but are the result of a carefully regulated process overseen by the Nova Scotia Utility and Review Board (NSUARB). With the help of this article, you’ll understand how these prices are set and what influences the price you see at the pump.
The NSUARB operates under the Petroleum Products Pricing Act, which sets the rules for wholesale and the minimum and maximum price of gasoline and diesel fuels sold in the province. But how does this translate to the price you see on the gas station display?
The Benchmark: New York Mercantile Exchange
The foundation of the gasoline and diesel fuel price is the price on the New York Mercantile Exchange (NYMEX). This price acts as a benchmark and is converted into Canadian funds.
Adding the Margins
To the NYMEX benchmark, several components are added. The first is a wholesale margin of 6 cents per litre, which covers the costs and profits of the wholesaler. Then comes a transportation allowance, which varies depending on location in Nova Scotia, ranging from 0.5 to 2 cents per litre. Finally, a retail margin of 4 to 5.5 cents per litre (up to 7.5 cents for full-serve gasoline) is added. This margin covers the costs and profits of the retailer.
The Role of Taxes
Taxes are a significant part of the pump price. The federal excise tax adds 10 cents per litre for gasoline and 6 cents per litre for diesel. The Nova Scotia Road Tax contributes an additional 15.5 cents. Lastly, the Harmonized Sales Tax, which is 15% of the total of the above, adds approximately 3 cents per every 20 cents per litre.
Price Changes and the ‘Interrupter’ Formula
Prices may change every Friday, depending on the market price over the past seven days. There’s also an “interrupter” formula that can trigger price changes. This formula calculates a 5-day average NYMEX spot price from the last price change to the current date. If this new average NYMEX spot price changes by ±4 cents per litre over the last NYMEX spot price average, the pump price may be adjusted using the new average NYMEX spot price as the baseline.
In extreme circumstances, such as a significant weather or geopolitical event, a “catastrophic interrupter” could be initiated. This could lead to significant price changes, emphasizing the market’s dynamic nature.
Historical Gas Prices
For those interested in the historical gas prices in Nova Scotia, the NSUARB provides detailed data dating back to December 31, 2019. Although we were unable to directly access this data, the historical prices can be found on the Nova Scotia Utility and Review Board’s official website.
Understanding how gas prices are set in Nova Scotia helps consumers and businesses plan and budget effectively. It highlights the many components and considerations that contribute to the final price you see at the pump. Despite the complexity, the goal remains to ensure a fair and balanced market for both suppliers and consumers.
We hope this article helps you and others better understand how gas prices are set in Nova Scotia. If you have any other questions or need further information, feel free to ask!
