PETROLEUM PRODUCT PRICING METHODOLOGY

The petroleum product pricing methodology (the "Methodology") has been utilized and approved by both current and prior petroleum pricing panel(s).  

The Methodology is as follows: 

• Gasoline:
  • Charlottetown rack price in cents per litre ("cpl")
  • + wholesale margin (presently 5.0 cpl)
  • + federal excise tax 10.0 cpl
  • + provincial gas tax 9.68 cpl
  • + carbon levy 4.42 cpl
  • + retail margin (presently 5.5 - 6.5 cpl self-serve and 7.5 - 10.5 cpl full-serve)
  • + HST (15%)
  • = retail pump price in cpl.
    
• Furnace Oil:
  • Charlottetown rack price in cpl
  • + combined wholesale/retail margin 21.0 cpl
  • + GST (5.0%)
  • = maximum retail price in cpl.
    
• Diesel:
  •  Charlottetown rack price in cpl
  •  + wholesale margin (presently 5.0 cpl)
  •  + federal excise tax 4.0 cpl
  •  + provincial gas tax 15.83 cpl
  •  + carbon levy 5.37 cpl
  •  + retail margin (presently 5.5 - 6.5 cpl self-serve and 7.5 - 10.5 cpl full-serve)
  •  + HST (15%)
  •  = retail pump price in cpl.

The Charlottetown rack price in cpl is entered in the Commission petroleum pricing database and the petroleum computer model is updated daily. The Commission monitors daily changes in both Charlottetown wholesale rack and New York Harbour price listed in $USA and converted by staff to $CDN and entered in the Commission database and model daily. First, the daily price for each petroleum product is calculated. Second, an average price is calculated over the prior one-week period. Third, a year-to-date weighted average price is calculated using actual volumes of petroleum product sold. 

The Petroleum Panel meets weekly to determine any changes that should be made to the price of gasoline, furnace oil and diesel fuel and determines the changes in the price of petroleum required to meet the one-week average price and the year to date weighted average price for each product. In setting the final price of all three petroleum products the Petroleum Panel uses these calculated numbers and, if appropriate, adjusts the price up or down if other qualitative factors - such as pressure on the New York Price from inventory levels or supply chain interruptions - dictate that there should be an adjustment to the calculated price. However, at most price settings the price is set only by the reference to the calculated average numbers provided by the database model. 

To summarize, when pricing, the Petroleum Panel first reviews all the quantitative numbers in the Methodology (daily price, one-week average price and year-to-date average price based on actual volumes of petroleum sold). These numbers dictate the change to be made in the petroleum prices. The Petroleum Panel will then review any relevant qualitative factors (daily and weekly USA domestic inventory reports, Kent Marketing Report, MarketWatch and Bloomberg NYMEX prices, and commentary on petroleum prices, demand and supply, and other commentary - OPEC, Global issues, refinery shut-downs, and severe weather events affecting off-shore drilling, etc.) that could affect prices. If the Commission is of the opinion that these qualitative factors are affecting prices, then the Commission may adjust the price dictated by the quantitative numbers.  

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 shall be based on the current practice of daily review by staff of petroleum prices for gasoline, furnace oil and diesel fuel. Staff will advise the Chair or Vice-Chair of any changes in the price of any of the regulated products that staff determine could have a material effect on petroleum prices. The Chair or Vice-Chair will then determine if a meeting of the Petroleum Panel to consider an unscheduled price interruption is to be held. If a meeting is held, then the Petroleum Panel shall consider the pricing in accordance with the Methodology and the process followed for a weekly price setting.

Page Last Updated: December 18, 2019