Wednesday, May 03, 2006

This is going to end poorly


Nova Scotia to regulate gasoline prices

Artificially regulating prices does not work. And Nova Scotians are about to find this out in a very hard way.

If they thought gas prices were high now...

13 comments:

Robert McClelland said...

How do you figure it's going to end poorly when PEI has been doing this for quite some time now with no ill effects?

Alberta Conservative said...

That'll be a popular program when gasoline prices drop and the price stays artificially high due to government regulations.

Scott Hennig said...

Nova Scotia has a slightly larger population than PEI, for starters. Gas companies might play ball in a province that probably only has 150 gas stations total.

But any losses a gas company might eat when the government keeps their prices artificially low will be taken back from consumers when they're allowed to raise prices.

And in the end if a gas company isn't making money in Nova Scotia they won't continue to operate, they'll leave. I'm sure people in Nova Scotia won't appreciate either artificially inflated prices or fuel shortages.

Robert McClelland said...

Spare us the hysterics, Scott. All they are doing is adopting a plan that will smooth out the day to day wild fluctuations. This will not in any way endanger the gazillions of dollars big oil is raking in. No other manufactured product experiences such wild fluctations as gasoline even though other products face the exact same commodity fluctuations. There's simply no reason for the price of gasoline to change 8 times in 2 weeks other than to gouge the consumer. And as I said, this plan has worked out quite well in PEI; not because of the smaller population but because it's workable and doesn't negatively impact gas station profits.

Eric-Vancouver said...

*GROAN*..It is almost not worth it but...Robert, the point of the original post and Scotts point is that this program will negatively affect consumers. No one cares about oil companies, but interventions such as this have a nasty habit of hurting the people they claim to help. Please try and red and understand the posts before you respond.

Andy Charles said...

All regulation does is smooth the price out for consumers. It does nothing to actually lower gasoline prices (as a tax cut would).

Moreover, regulation requires costly enforcement to make it effective. No thanks.

David MacLean said...

Robert, you couldn't be more wrong. Price regulation does not save money for consumers, and the governments of PEI and Newfoundland both acknowledge that. All they do is smooth out the price fluctuations -- and that is a bad move.

The Conference Board of Canada studied the issue a few years ago and found that price fluctuations are actually a symptom of a highly organized, competitive and efficient market.

Robert McClelland said...

I never said the move would save consumers money, Davey. And smoothing out the price fluctuations is not a bad move. A wildly fluctating market is not good for the consumer. Go ahead and squawk though. This plan is working successfully eleswhere and will work in NS too. And then it will move west to other provinces.

Andy Charles said...

"I never said the move would save consumers money"

Why do it then?


Did you know a head of lettuce costs twice as much in the winter. Should we contact the competition bureau to investigate?

David MacLean said...

Thanks AC. For Robert, the means justifies the end.

frappeur said...

The effect of price regulation in PEI was to reduce the number of gas stations. Stations which did not pump a high minimum amount of fuel were refused delivery.

It meant that the small local service station closed and people had to travel further to get their gasoline.

At one point Wilson fuels threatened to stop all deliveries on the Island if the price was not allowed to rise even though it was not an official price change time.

The Island Regulatory and Appeals Commision rapidly adjusted the prices out of phase with their monthly schedule. At that time the price changed erratically. It begged the question whether a regulatory system was really needed.

IRAC approved prices

Prices now change at least twice a month which has line-ups appearing at gas stations before the 1st and15th of each month.

David MacLean said...

That's really interesting. Totally predictable, of course.

Scott Hennig said...

I happily stand corrected that gas companies are in fact not playing ball in PEI as I suggested in my first comment.

Thanks for the info frappeur!

CTF You Tube Channel

Canadian Taxpayers Federation's Fan Box