The Canadian government has constitutional authority to regulate gasoline prices only in an emergency. However, provinces and territories can regulate prices, and Quebec and the Atlantic provinces do so.
Provinces regulate gasoline prices to reduce price volatility -- high up or down price changes -- and to protect small independent retailers.
Quebec sets minimum prices weekly based on its estimate of the acquisition cost of gasoline. The price includes an estimate of transportation costs and can include a minimum retail margin at the discretion of the regulating body, the Regie de l’energie du Quebec.
In New Brunswick, the Energy and Utilities Board sets the maximum price every Thursday based on a formula that links the price to the New York Harbour price, with allowances made for other factors such as retail margins. No minimum price is set.
Nova Scotia also uses New York Harbour spot prices to set a benchmark price. Wholesale prices are set 6 cents a litre higher than the benchmark, and a transportation allowance is included in the price, ranging from 0.2 to 2.0 cents per litre, depending on the zone. Retailers are allowed a margin of 5.5 cents per litre and cannot sell below a margin of 4 cents per litre.
Prince Edward Island
In Prince Edward Island , prices are set by the Island Regulatory Appeals Commission. The Commission has full discretion in setting prices and tracks a wide variety of trends in determining the price level. In practice, it also uses New York Harbour prices to drive changes in the regulated price. Prices on the New York Mercantile Exchange (NYMEX) are averaged over a two week period and the new maximum and minimum prices are usually announced on the first and 15th of every month. Wholesalers have the right to apply for a decrease in their wholesale price. In theory, this could result in different prices from one brand to another. In practice, any such differences are rare and short-lived.
Newfoundland and Labrador
In Newfoundland and Labrador, the price of gasoline is set by the Board of Commissioners of Public Utilities. The Board sets a benchmark price based on spot market prices and adds on various factors such as wholesale and retail margins, transportation and taxes to arrive at a maximum price. The province is divided into 18 zones to accommodate differing transportation costs. Prices are revised monthly.