Carbon charges, chaotic markets drive N.B. fuel prices to highest in region

Kevin Nicolle spends several hundred dollars a week on fuel to run his car wash and mobile power washing business in Saint John.

He marvels at the up-and-down swings in prices for gasoline and diesel he has been encountering multiple times a week.

Over the weekend, the trend was upward.

"It's terrible," said Nicolle. "But I mean what can you do. There's nothing you really can do."

Late last week, trading in gasoline markets in New York bumped up six cents. In response, New Brunswick — alone among Maritime provinces — on Sunday lifted the ceiling on what consumers can be charged by gasoline retailers.

It was the third increase in the province in four days.

On Thursday, prices jumped during normal weekly price setting by the New Brunswick Energy and Utilities Board.

On Friday, there was an increase in federally mandated carbon charges that hit New Brunswick but left consumers in Prince Edward Island and Nova Scotia untouched.

Market triggered increase

Then the special market-triggered increase came on Sunday.

On gasoline, it totalled 19.6 cents in increases in four days, and by Monday morning legal maximum gasoline prices in New Brunswick had climbed nearly 14 cents per litre higher than in Nova Scotia. Diesel prices were a record 29 cents more.

Prince Edward Island price advantages over New Brunswick are similar.

"I don't understand that," said Nicolle, who is baffled by the differences, but has little choice other than to pay up.

"It's hard to do these days, but you've got to do it.… A man's got to make a living."

Dramatic lurches in pricing in New Brunswick, up and down, are caused by rigid rules in the operation of its petroleum price regulation system. They require changes in New York trading markets of six cents or more to be passed through to consumers within a little more than a day.

More discretion

Nova Scotia and Prince Edward Island give regulators in those provinces more discretion to smooth changes, especially when they are moving up and down on subsequent days.

Over the last week, not including carbon charges. New Brunswick moved its maximum price for gasoline three times. There was a 9.2-cent decrease on Wednesday, a 9.8-cent increase on Thursday and another 7.2-cent increase on Sunday.

In Nova Scotia, prices changed only once — a 5.5-cent reduction on Friday.

Sometimes New Brunswick's system will produce a sudden discount to the benefit of consumers, like on March 11 when diesel prices dove 24 cents below those in Nova Scotia. Sometimes it is the opposite, like on Friday when they rocketed 29 cents higher.

Carbon changes

But increasingly higher prices in New Brunswick are also structural, mostly due to carbon charges.

On April 1, charges for carbon dioxide emissions in New Brunswick under federal requirements rose to $50 per tonne. That increased carbon taxes in New Brunswick to 11.05 cents per litre on gasoline and 13.41 cents on diesel.

The same two charges in Nova Scotia are 1.18 cents on gasoline and 1.5 cents on diesel. Those amounts did not change on April 1.

Nova Scotia opted for a complex "cap and trade" system for pricing carbon in 2019 that has allowed it to escape significant increases in fuel prices.

Criticism from environmentalists

It's a difference that's been drawing sharp criticism from environmentalists like Louise Comeau, the New Brunswick Conservation Council's director of energy, climate change and energy solutions.

Higher carbon costs in New Brunswick are partly rebated back to consumers through lower income taxes and other measures. But they also generate significant differences in pricing at the pumps with neighbouring provinces and, according to Comeau, undermine the idea of a national climate policy.

"We've got to move on a much more consistent and coherent approach," said Comeau in an interview with CBC News earlier this year.

"It doesn't do anybody any good to have different regimes and put New Brunswick in a real bind."

The federal government has pledged to narrow carbon price differences between provinces, but that may not begin to happen in Nova Scotia until 2023.

Meanwhile, Prince Edward Island was supposed to begin charging the same carbon prices as New Brunswick last Friday but did not pass legislation in time to meet the deadline.

It is currently charging 4.4 cents per litre of gasoline less than New Brunswick but has promised changes are coming as early as this week.