How are the Maximum Prices Established?

STEP 1: Calculating the Benchmark Price: Benchmark prices are based on the average prices on international markets where the product is sold in significant volumes. For motor fuels and furnace oil, the benchmark price is based on the average New York Harbour Price. The benchmark prices for mid-grade and premium gasoline include mark-ups established by Regulation. In the case of propane, the Sarnia, Ontario market price is used.

The Board calculates weekly benchmark prices based on the average of its daily reference prices for the seven-day period, excluding the weekend since the benchmark price of that petroleum product was last published.

STEP 2: Establishing the Wholesale Price: The wholesale margin is added to the benchmark price. The maximum wholesale margin is 6.51 cents per litre for each type of motor fuel, 5.5 cents per litre for furnace oil and 25.0 cents per litre for propane.

STEP 3: Taxes are Added: After the wholesale margin is added, the appropriate taxes are applied. In the case of motor fuels, the federal excise tax, the provincial gasoline and motive fuel tax, the provincial carbon emitting product tax, and the harmonized sales tax (HST) are all applied. For heating fuels, only the HST is added. This results in the maximum wholesale price.

STEP 4: Setting the Retail Price: The retail margin is added to the maximum wholesale price. The maximum retail margin is 8.46 cents per litre for each type of motor fuel. In the case of full-service motor fuels, the retailer may also charge an additional 3.0 cents per litre. The HST is then applied to the retail mark-up to get the Maximum Retail Price.

The process is the same for furnace oil and propane except that the maximum retail margins are higher. For furnace oil, the maximum retail margin is 27.21 cents per litre; for propane, the maximum retail margin is 25.0 cents per litre.

STEP 5: Adding the Delivery Cost: Wholesalers are allowed to recover the cost of delivering petroleum products to various parts of the province, up to a maximum of 3.75 cents per litre for motor fuels.

On Grand Manan Island, the maximum delivery cost is 5.0 cents per litre. Retailers are allowed to pass these delivery costs on to consumers.

The maximum delivery cost for furnace oil is 5.0 cents per litre, and for propane, it is 10.0 cents per litre.

The HST is then applied to the maximum delivery cost for each fuel type.

STEP 6: Cost of Carbon Adjustor: The cost of carbon adjustor has been set at 0.00 cents per litre as of December 20, 2022. It will be reset following a process that will be established by the Board.

STEP 7: Market Adjustor: The market adjustor has been set at 0.00 cents per litre as of December 20, 2022. It will be reset following a process that will be established by the Board.