No sign oil refiners in N.B. are paying cost of government-orchestrated cut in gas price

A claim by New Brunswick Premier Susan Holt that petroleum refiners will be paying the $1 million per week cost of a gasoline price cut that her government orchestrated last weekend does not appear to be unfolding that way.

And the Premier's Office is clarifying a comment she made about wholesalers and retailers having a "protected margin" on the sale of gasoline in the wake of the price reduction, acknowledging margins for the two groups are not actually guaranteed. 

Last Saturday. petroleum prices around New Brunswick were forced to their lowest level in more than four years after the provincial cabinet approved a change in how the maximum retail price for gasoline in New Brunswick is calculated.

The switch involved ending the cost of regular gasoline as the basis for calculating maximum allowed prices in the province and replacing it with ethanol-blended gasoline known as E10.

At the moment E10 is the cheaper of the two.

On Friday, hours before the change took effect Premier Susan Holt told reporters the 6.8 cent reduction in what retailers could charge the public would benefit  consumers, but without financially harming retailers.

"It'll come out in the end likely to the refineries," Holt said when asked who would pay the price of the discount.

New Brunswick retailers sell one billion litres of gasoline annually. Pulling 6.8 cents out of the price means the potential loss of more than $1 million in revenue somewhere in the supply chain per week.

But Holt seemed to suggest wholesalers and retailers of gasoline would be financially shielded from absorbing the reduction and their businesses would be able to operate as normal despite the pricing change.

"Because they now have a protected margin that the [Energy and Utilities Board] put in place through two hearings, it won't impact the delivery of gas," she said.

However, in an email this week, the Premier's press secretary said it was not Holt's intention to suggest amounts wholesalers and retailers make from selling each litre of gas in New Brunswick are guaranteed to them.

"The reference to "protected margins" was only meant to imply retail and wholesale margins are applied on top of the benchmark price when calculating the maximum price," wrote Katie Beers.

So far there have been few signs that oil refiners are rushing to finance the lower prices themselves.

According to pricing data collected and published by the energy information company Kalibrate, there has been no significant decline in what oil refiners have been charging to supply gasoline in New Brunswick to match the 6.8 cent reduction in prices that landed on New Brunswick retailers on Saturday.