About the Industry

Regulated Markets

Regulated markets are places where the retail gasoline price or its parameters are established by provincial governments. Prince Edward Island, Newfoundland and Labrador, Nova Scotia, New Brunswick and Quebec have some form of regulated markets.

Retail gasoline prices fluctuate regularly in response to free market forces such as competition, wholesale market and world prices for crude oil. It is generally recognized that regulations cannot influence the worldwide fundamentals of gasoline—a commodity whose price is determined in continental markets and greatly influenced by worldwide events.

Regulation can be used to prevent below-cost selling, guarantee dealer margins and ensure retail price stability. CPPI believes that an open unregulated marketplace is the best way to ensure competitive pricing and this viewpoint is confirmed by many studies and reviews of price regulations.

Prince Edward Island, Nova Scotia and Newfoundland and Labrador have adopted maximum price regulations that guarantee retail margins and attempt to stabilize pump prices. While regulators have tried to keep prices stable for a month at a time, this has forced regulators to turn to complex interruption formulas to deal with wholesale price volatility. Regulation and interruption formulas attempt to control retail prices by replicating conditions in somewhat less volatile commodity and wholesale markets. Experience indicates that regulating price stability is accomplished at the expense of the consumer through higher pump prices.