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  • Sean
    July 02, 2010 - 13:30

    Everton McLean, the CBC, and NTV need to do some critical analysis here. AIMS is a right wing, conservative think tank. Their whole reason for existence is the promotion of deregulation and a strong belief in the free market. They are a BIASED organization who clearly started with a conclusion and published a study to support it. They would never publish a study supporting regulation in any form, even if all of the evidence pointed that way. Why are they being quoted as if they are a totally independent-minded group? I am personally not wedded to the idea of gas price regulation, but I would love to see a study by an independent, impartial source, rather than AIMS.

  • Dave
    July 02, 2010 - 13:27

    Oil companies are oligopolies. Banks fall into this category. These organizations have learnt a long time ago that price competition is a futile exercise. Every member of the oligopoly loses.The overall price of the product is determined by demand in the marketplace. They must differentiate their business based on service or other offerings.

    Oil companies love the Guaranteed Profit Model run by the bureaucracy in Newfoundland. There is no need to worry about any aspect of pricing. The bureaucracy builds the pricing model based on input from the oil companies. The bureaucrats create nice government jobs and the oil companies have a controlled profit margin. The only loser is Joe Newfoundlander.

    Then, out of the sea rises the oracle - George Murphy who predicts the price of oil products by keying known inputs into the known pricing model. Wow, what a great forecaster!

    Where are the educated Newfoundlanders who will raise their voices against such bureaucratic insensibilities. They must be too busy being educated at Joey's university.

  • Dave in NL
    July 02, 2010 - 13:23

    Price regulation causes consumers to pay more for petroleum products. Period. It is the only regulatory instrument that does not cause furor among the oil companies, which should be one indicator of whom it benefits. The real cost to Newfoundland, which I cannot believe has not been recognized, are the lost jobs. Since price regulation has been implemented, most marine and bulk fuel terminals in the province have been closed, major marketing companies have exited the province, all management/headquaters' positions for the majors were eliminated, and I could go on. Witness the home heating fuel business on the west coast....from eight players down to one. Well done!
    There is a reason, only three jurisdictions in North America have adopted price regulation and in these instances it was done as part of a political campaign - which is hardly a good foundation for any regulation. The only people that have benefited from price regulation in NL are a retired teacher and a taxi driver.
    For a province so dependent on oil revenues for fiscal management, get rid of price regulation and pray for $1.25/litre gasoline (based on New York Harbor prices..not greedy independent retailers).

  • Mark
    July 02, 2010 - 13:08

    I agree with the AIMS study, and I consider myself left-of-center and would be the last to defend unfettered capitalism. Since gas price regulation came into effect, I have used the Petroleum Pricing Commissions' own information to develop a formula myself for what the local price of gas would be so that I could time my fill-ups for the rises and falls that happened when the price was set.

    I quickly saw that gas price regulation protected us from very rare and unusual price spikes (like when hurricane Katrina hit), but where it is an average, with an interruption formula, rather than price that is set daily, the downside is that we never see the price of gasoline fall very quickly. I soon saw that if the local price of gas was allowed to float daily, based on the NY Harbor spot price, then we'd pay a lot less than that which is averaged out over a week or two.

    The numbers tell the truth. You add into that the cost of the government bureaucracy for regulation, and the cost to the gas stations to have to go along with all this, along with the cost for consumers having to wait for the price to fall, you can see how it all ads up. Meanwhile, the bureaucracy cannot keep up with market conditions and consumer demand. We just have to look to the Labrador coast price freeze problem this year to see the predicament. We only have to look to those independent and rural gas stations that have closed, to see where small business owners cannot tweak the prices to match their local needs and customers who might be willing to pay a little extra to keep a local gas station open.

    Personally, I would favor a system whereby the PUB randomly sampled gas-station prices monthly and checked them against a formula to see if they were charging fair-market value, rather than imposing regulation.

    But, in the end, it is up to the people whether they want to pay this extra cost. While we pay more for gasoline, we also get predictability and price stability and can thus budget.

  • Sean
    July 01, 2010 - 20:18

    Everton McLean, the CBC, and NTV need to do some critical analysis here. AIMS is a right wing, conservative think tank. Their whole reason for existence is the promotion of deregulation and a strong belief in the free market. They are a BIASED organization who clearly started with a conclusion and published a study to support it. They would never publish a study supporting regulation in any form, even if all of the evidence pointed that way. Why are they being quoted as if they are a totally independent-minded group? I am personally not wedded to the idea of gas price regulation, but I would love to see a study by an independent, impartial source, rather than AIMS.

  • Dave
    July 01, 2010 - 20:14

    Oil companies are oligopolies. Banks fall into this category. These organizations have learnt a long time ago that price competition is a futile exercise. Every member of the oligopoly loses.The overall price of the product is determined by demand in the marketplace. They must differentiate their business based on service or other offerings.

    Oil companies love the Guaranteed Profit Model run by the bureaucracy in Newfoundland. There is no need to worry about any aspect of pricing. The bureaucracy builds the pricing model based on input from the oil companies. The bureaucrats create nice government jobs and the oil companies have a controlled profit margin. The only loser is Joe Newfoundlander.

    Then, out of the sea rises the oracle - George Murphy who predicts the price of oil products by keying known inputs into the known pricing model. Wow, what a great forecaster!

    Where are the educated Newfoundlanders who will raise their voices against such bureaucratic insensibilities. They must be too busy being educated at Joey's university.

  • Dave in NL
    July 01, 2010 - 20:07

    Price regulation causes consumers to pay more for petroleum products. Period. It is the only regulatory instrument that does not cause furor among the oil companies, which should be one indicator of whom it benefits. The real cost to Newfoundland, which I cannot believe has not been recognized, are the lost jobs. Since price regulation has been implemented, most marine and bulk fuel terminals in the province have been closed, major marketing companies have exited the province, all management/headquaters' positions for the majors were eliminated, and I could go on. Witness the home heating fuel business on the west coast....from eight players down to one. Well done!
    There is a reason, only three jurisdictions in North America have adopted price regulation and in these instances it was done as part of a political campaign - which is hardly a good foundation for any regulation. The only people that have benefited from price regulation in NL are a retired teacher and a taxi driver.
    For a province so dependent on oil revenues for fiscal management, get rid of price regulation and pray for $1.25/litre gasoline (based on New York Harbor prices..not greedy independent retailers).

  • Mark
    July 01, 2010 - 19:43

    I agree with the AIMS study, and I consider myself left-of-center and would be the last to defend unfettered capitalism. Since gas price regulation came into effect, I have used the Petroleum Pricing Commissions' own information to develop a formula myself for what the local price of gas would be so that I could time my fill-ups for the rises and falls that happened when the price was set.

    I quickly saw that gas price regulation protected us from very rare and unusual price spikes (like when hurricane Katrina hit), but where it is an average, with an interruption formula, rather than price that is set daily, the downside is that we never see the price of gasoline fall very quickly. I soon saw that if the local price of gas was allowed to float daily, based on the NY Harbor spot price, then we'd pay a lot less than that which is averaged out over a week or two.

    The numbers tell the truth. You add into that the cost of the government bureaucracy for regulation, and the cost to the gas stations to have to go along with all this, along with the cost for consumers having to wait for the price to fall, you can see how it all ads up. Meanwhile, the bureaucracy cannot keep up with market conditions and consumer demand. We just have to look to the Labrador coast price freeze problem this year to see the predicament. We only have to look to those independent and rural gas stations that have closed, to see where small business owners cannot tweak the prices to match their local needs and customers who might be willing to pay a little extra to keep a local gas station open.

    Personally, I would favor a system whereby the PUB randomly sampled gas-station prices monthly and checked them against a formula to see if they were charging fair-market value, rather than imposing regulation.

    But, in the end, it is up to the people whether they want to pay this extra cost. While we pay more for gasoline, we also get predictability and price stability and can thus budget.