October 15, 2001
(Government Services and Lands)


The following is being distributed at the request of the Petroleum Products Pricing Commission:

Official regulation of petroleum pricing for all grades of gasoline and diesel fuel under the Petroleum Products Act formally came into effect this morning at 8:00 a.m. 

Oil companies doing business in the province were provided with a table of maximum wholesale and retail prices on Sunday evening, and starting today, the public of Newfoundland and Labrador will receive the information on maximum retail prices by zone through their various community newspapers as well as through the provincial government's website. The radio stations have also been provided with this information, and people may call our office in Grand Falls-Windsor at our toll free number for any specific inquiries � 1-866-489-8800.

In this first formal round of setting maximum prices, the commission is sensitive to the reality that the people of our province, especially retailers of gasoline and diesel fuel, will need time to receive the official notices on pricing, and become familiar with the respective zones. A province-wide mail out to retailers and wholesalers of the maximum retail and wholesale pricing tables by designated zone is expected to be completed in the immediate future. The commission has a recorded database of approximately five hundred retailers, and we encourage all the remaining retailers to register as soon as possible.

The new pricing system sets the maximum prices allowed to be charged for all brands of gasoline and diesel fuel in the twelve zones now completed, for both self-serve and full-serve prices. Zone 11 and Zone14 in Labrador will be regulated next month which has already been stated in a previous news release.

Reduction in maximum prices across the province

It is to be noted that these maximum allowable prices result in reductions in prices at the pumps in virtually all zones throughout the province. This is largely a result of the research into the various factors that impact directly on the pump prices, in particular, the cost of transportation, storage and handling. Although we requested the oil companies to provide us with accurate costs pertaining to these matters, they were not fully forthcoming with the information, so the commission conducted its own research and applied what we believe to be fair and reasonable amounts to cover such costs. 

Differential pricing between grades of gasoline

In addition to an overall reduction in the price of gasoline and diesel fuel, the commission looked carefully at the differentials between the grades of gasoline that are being sold in Newfoundland and Labrador. It also took into account the historic differentials of �super' premium-unleaded gasoline in New York Harbour pricing compared to the historic pump prices in this province. It concluded that the existing price differentials of 3 cents per litre to 4 cents per litre with HST tax included were too high, notwithstanding the smaller volumes of these products sold through gasoline outlets and in some cases �special additives' added by individual oil companies. The commission felt that until it is convinced otherwise, the tax-included differentials between these grades should be reduced to 2.5 cents per litre in each case. Therefore, it has established maximum pump price differentials of 2.5 cents per litre between regular and mid-grade unleaded gasoline, and a further 2.5 cents per litre between mid-grade and super premium (supreme) gasoline. 

Maximum prices for automotive diesel fuel

The commission compared the pump price of automotive diesel fuel with the New York Harbour price for low sulphur diesel and also with the ex-tax prices charged for this product in other provinces. Whereas it realizes that there is only a relatively small volume sold through retail diesel outlets, (almost all diesel for truckers is sold via key lock/card lock facilities), it still believes that the total base margin from New York Harbour pricing is sufficient to enable wholesalers and retailers to retain viable operations. The maximum retail prices set for automotive diesel through retail outlets in Newfoundland and Labrador also brings it more in line with that charged in other provinces. 


The prices being released today are in effect for at least thirty days, at which time price adjustments may be made. The commission emphasizes that it has no guarantee that prices will continue to fall, but we will closely monitor all changes on an on-going basis to insure complete fairness.

The commission is also sensitive to situations wherein low volume gasoline outlets are servicing remote communities in the province. Often, these outlets are the only source of gasoline available for consuming public in the particular area and supply could become critical at times roads might become blocked during the winter season. In these instances and in others where special circumstances exist, the commissioner would entertain a representation for the outlet operator and/or the supplying wholesaler for a different base price in order to ensure that the operator retains a degree of economic viability. In such instances, a joint written submission from the supplier and the outlet operator would be preferable. 

We believe the prices set today reflect the true basis of fair pricing in our province, based on an exhaustive research conducted during the past several months. In fact, we have studied the historical data as far back as 1999. Our decisions are, we believe, most fair to all stakeholders in Newfoundland and Labrador, and we are anticipating full cooperation from the business community as well as the motoring public. 

Media contact: George Saunders, Commissioner, (709) 489-8877.

2001 10 15                           11:35 a.m.

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