Gas prices fall on P.E.I., but still well above N.S. prices

Prices for fuel fell overnight on P.E.I., but the prices for gas and diesel are still well above what consumers are being charged in Nova Scotia.

This was an unscheduled change by the Island Regulatory and Appeals Commission.

The minimum price at the pump for gasoline fell 5.7 cents to $1.762 per litre. Diesel was down 10.3 cents to $1.853.

The minimum price for gas in Halifax is $1.631 and for diesel it is $1.715.

There are a lot of differences in the way Nova Scotia and P.E.I. price gasoline, said CBC journalist and gas price analyst Robert Jones, and currently those are aligning to make a large difference.

Carbon and base prices making the difference

Both price regulatory bodies — the Nova Scotia Utility and Review Board and IRAC in P.E.I. — break down gas prices by where the money goes.

There is a base price listed in both provinces, but Nova Scotia lists a benchmark price, and P.E.I. a rack price.

"The benchmark price for fuel is the actual average New York trading price for barge loads of gasoline or diesel or furnace oil that buyers and sellers negotiate among themselves on any given day," said Jones.

"P.E.I. used to use it as step one in setting prices but switched to rack prices a while back. In Charlottetown, if you go to where the big fuel depot is there are actual racks that tanker trucks pull up to to get themselves filled. The price of those tanker fillups is the rack price."

The rack price is usually a few cents higher than the benchmark, said Jones. On Wednesday morning, the benchmark was $0.9927. The rack price was more than a dime higher, at $1.10.

Another big difference is in the carbon levy. On P.E.I. it is 11.05 cents a litre for gasoline, but because Nova Scotia has a cap and trade system in lieu of higher carbon levies, it is just 2.0 cents.

In other areas, IRAC pricings bring down the cost in comparison to Nova Scotia. The wholesale margin set by NSURB is 9.65 cents. IRAC allows a 5.0 cent wholesale margin. Provincial tax is also higher in Nova Scotia, 15.5 cents versus 8.47 cents.

When taken in sum these charges — carbon pricing, provincial taxes, wholesale and retail margins — which are all fixed, result in a difference of just a little more than two cents extra that Islanders are regulated to pay. The main source of difference is in rack and benchmark prices.

In an email to CBC News, IRAC noted markets remain volatile, and that while prices are cheaper in Halifax, they are 10 cents higher in Moncton.

The difference in the rack and benchmark prices has been particularly volatile in the last week. The difference in the last year has typically been 7.7 to 9.0 cents, says IRAC, but last Thursday it was 14.9 cents, and on Wednesday it was just 3.6 cents.