How are gas and diesel prices set?
To set prices, the Board begins by determining the benchmark price, which at present is a calculation of how refined gasoline and diesel have been trading on the New York Mercantile Exchange (NYMEX) market since the last time prices were adjusted.
The benchmark price is calculated by averaging the daily average high and low prices reported in the market for each fuel type since the last adjustment and then converting those average prices into Canadian dollars.
The retail price paid at the pumps is the sum of the benchmark price plus the following required components:
- a mark-up for wholesalers
- a mark-up for retailers
- a charge to comply with federal Clean Fuel Regulations
- a transportation allowance
- a winter blending allowance (diesel only, when applicable)
- a federal fuel tax (10 cents/L on gasoline and 4 cents/L on diesel) [currently suspended until September 7, 2026]
- a provincial fuel tax (15.5 cents/L on gasoline and 15.4 cents/L on diesel)
- Harmonized Sales Tax (HST)
Additionally, the Board can apply a Forward Averaging Correction to ensure the regulated wholesale margin is achieved over time, or to smooth out the ups and downs of fuel prices. This correction may add or subtract to the cost of fuel.
In Nova Scotia, there is no maximum price for gasoline or diesel at full-service stations.
How often are gas and diesel prices set?
The Board calculates a new benchmark price for gas and diesel every Friday, or more often if market prices change sharply. It monitors the market every day and may set a new price at any time.
Wholesalers, wholesaler-retailers, and retailers receive notice of the changes by no later than 2 p.m. the day before new prices take effect. Prices typically take effect at 12:01 a.m. the next morning.
What is the “Interrupter,” why is it needed, and when is it used?
The interrupter is a tool the Board can use to adjust pump prices outside of the normal weekly (Friday) price-setting schedule.
The interrupter is needed because gasoline and diesel are traded on international markets 24 hours a day. Major economic news, political events, or weather systems, etc., can cause sudden price swings or supply issues.
When these rapid changes occur, the Board may "interrupt" fuel prices (i.e. adjust them outside of the regular schedule) to help maintain fair pricing and protect fuel supply.
The Board typically uses the interrupter if the price of refined gasoline or diesel, as traded on the New York Mercantile Exchange (NYMEX) and converted to Canadian dollars, changes by at least six cents per litre relative to the benchmark for more than one day. That’s why an interruption always takes place a day or two after the initial market price movement.
Why doesn’t the Board publicly disclose prices before they come into effect?
The Board is not allowed to publicly disclose gas and diesel prices before they come into effect. That includes disclosing whether prices will go up or down, and by how much.
It is illegal for a wholesaler, wholesaler-retailer, or retailer to disclose prices in advance, as that would violate Section 21 of the Petroleum Products Pricing Regulations.
What are the primary drivers behind changes in pump prices in Nova Scotia?
- Changes in the market price
- Changes in the exchange rate between the Canadian dollar and US dollar
The price of crude has changed sharply. Why isn’t the Board adjusting prices?
The Board does not use crude oil prices when setting fuel prices. Instead, the Board relies on NYMEX's spot prices for E10 gasoline, E10 Premium gasoline, and Ultra-low sulfur diesel (ULSD).
Crude oil, gasoline, and diesel are different products in the market and are subject to different supply and demand influences. The three products may move in different directions and/or at different speeds on individual days. Gasoline and diesel market values are used to set pump prices because they reflect the cost to purchase the refined product.
Who can request that the Board review the prices, mark-ups, and zone boundaries?
- a retailer, wholesaler, or wholesaler-retailer
- any person, firm, or corporation,
- the Minister
Upon receipt of an application, the Board must investigate and/or hold a hearing to decide whether the current prices, mark-ups, or boundaries are fair and reasonable.
Why are gas and diesel prices different across the country? And what causes those differences?
Gasoline and diesel prices vary across Canadian provinces for several reasons, including:
- different provincial fuel taxes
- different provincial sales taxes
- regulated vs. unregulated prices (some provinces regulate fuel prices, others allow gas stations to set their own prices)
- different transportation and distribution costs (provinces closer to refiners benefit from lower transportation costs)
- proximity to any of the major US trading hubs (ex. Chicago, LA, New York, etc.)
- local competition (ex. between gas stations, suppliers, etc.)
How does winter and summer blending affect fuel prices? And why don’t we stick with one blend year around?
Summer blend gasoline is more expensive to produce than winter blend, ultimately rising fuel prices in the warmer months.
Changes in temperature and environmental concerns require the components of gas to be altered between seasons.
In the summer months, refiners remove lighter, cheaper components like butane and replace them with heavier, more expensive components like alkylates. That’s because butane evaporates easily at higher temperatures, which can lead to increased emissions and contribute to air quality issues during the hot summer months.
In contrast, butane is needed during the winter months to ensure there’s enough vapour in the engine so it can start in cold temperatures.
Summer fuel blending standards are managed by the federal government and implemented on April 15. The shift back to winter blending happens on September 15.