The petroleum product pricing methodology has been utilized and approved by both current and prior petroleum pricing panels.
Components of pricing:
- Regular Gasoline:
- Charlottetown rack price in cents per litre (“cpl”)
- + wholesale margin 5.0 cpl
- +/- forward averaging adjustment
- + federal excise tax 10.0 cpl
- + provincial gas tax 8.47 cpl
- Federal Fuel Charge 0.0 cpl
- + retail margin (presently 7.0-8.0 cpl self-serve and 7.0-10.5 cpl full-serve)
- + HST 15%
- = retail pump price in cpl.
- Premium Gasoline:
- Charlottetown rack price in cents per litre (“cpl”)
- + wholesale margin 5.0 cpl
- +/- forward averaging adjustment
- + federal excise tax 10.0 cpl
- + provincial gas tax 8.47 cpl
- Federal Fuel Charge 0.0 cpl
- + retail margin (presently 7.0-8.0 cpl self-serve and 7.0-10.5 cpl full-serve)
- + HST 15%
- = retail pump price in cpl.
- Furnace Oil:
- Charlottetown rack price in cpl
- + combined wholesale/retail margin 23.1 cpl
- +/- forward averaging adjustment
- + GST 5.0%
- = maximum retail price in cpl.
- Diesel:
- Charlottetown rack price in cpl
- + wholesale margin 5.0 cpl
- +/- forward averaging adjustment
- + federal excise tax 4.0 cpl
- + provincial gas tax 14.15 cpl
- + retail margin (presently 7.0-8.0 cpl self-serve and 7.0-10.5 cpl full-serve)
- + HST 15%
- = retail pump price in cpl.
The Commission follows a set methodology for petroleum pricing. Changes in the price of petroleum products are tracked daily in the Commission’s pricing database and petroleum pricing model for both the commodity price on the New York Mercantile Exchange (the base price used by the oil industry for all petroleum products sold in the Atlantic Provinces) and the Charlottetown rack price (delivery price of refined product to Charlottetown Harbour set by oil companies). The daily price for each petroleum product is calculated, an average price is calculated over the prior one-week period, and a year-to-date weighted average price is calculated using actual volumes of petroleum product sold. Conversions are made for $USA to $CDN and gallons to litres.
At its weekly price setting meetings, the Petroleum Panel reviews three prices:
• the daily price for each petroleum product;
• the average price for each petroleum product over the prior one-week period; and
• the year-to-date weighted average price for each petroleum product calculated using actual volumes sold.
These numbers determine the weekly price adjustments for gasoline, diesel, and furnace oil.
In setting the final price of all three petroleum products, the Petroleum Panel primarily uses the average price for the prior one-week period. The Panel adjusts this weekly average price up or down by a forward averaging amount to ensure that the year-to-date weighted average wholesale and retail margins are achieved. The forward averaging adjustment is also used, although infrequently, to adjust the weekly price if other factors, such as supply and demand, are impacting the market price so much that an adjustment to the calculated weekly average price is required.
The Commission may, in its sole discretion, amend the methodology from time to time.
Price Review and Consideration of Unscheduled Price Adjustments
The Commission policy for unscheduled interruption of petroleum pricing is based on the current practice of daily review by staff of petroleum prices for gasoline, furnace oil and diesel fuel. Staff advise the Chair or Vice-Chair of any changes in the price of any of the regulated products that could have a material effect on petroleum prices. The Chair or Vice-Chair then determine if a meeting of the Petroleum Panel is warranted to consider an unscheduled price interruption. If a meeting is held, the Petroleum Panel considers the pricing in accordance with the Methodology and the process followed for a weekly price setting.