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  It’s interesting how our provincial government has taken ownership and responsibility first for the cost of electricity and now for the price of gasoline.
  
  In the first instance and contrary to recommendations from the Public Utility Board, they capped electricity price increases at 8% and then offered consumers an 8% tax cut to offset the increase. The tax cut will come in the form of a rebate, a huge make work project for the bureaucracy who will have to receive and process rebate applications, verify the legitimacy of receipts and issue payment cheques.
  
  Consumers will still pay the 8% increase in electricity prices. They will also have to save their receipts and twice a year apply for the rebate if they want their money back.
  
  For consumers with an average electricity bill of $300 a month that will mean forking over an extra $24 a month for six months to pay the tax. If we assume 30 days for processing, the first rebate cheques will come seven months after the price increase goes into effect. That’s not good news for people on fixed incomes. In effect, they are being asked to fund the government’s tax loss for seven months of the year.
  
  In the second instance, the Government decided to “regulate” the price of gasoline.
  
  I put the word regulate in quotations because they don’t have the tools to regulate gasoline prices. All they can do is put a price cap on gasoline and hope they guess right in terms of the cost.
  
  What makes the regulatory regime a joke are the factors of cost that go into the price of a litre of gasoline. If they really wanted to control prices they would do so with the tax system but that would cost them money.
  
  The first consideration in the price of gasoline is the price of oil. New Brunswick has none so we import it from the Middle East.

The Government’s formula for pricing gasoline is subjected to a market test in New York. Platt’s New York Harbour price for refined gasoline products is being used as the baseline for New Brunswick’s price cap.

• Movements in the price of oil and value of the Canadian dollar play a role in the pricing formula.
• Average daily prices for gasoline in the previous two weeks and projections for the next two weeks are also factors in price-setting.
• When all factors are considered, we have a base price.

For discussion purposes, let’s say that base price is 68¢ a litre.

1. Add 10¢ a litre for the Federal Excise Tax and then add the Provincial Gasoline and Fuel Tax of 14.5¢ a litre.
2. Using the provincial government’s formula, wholesalers can add 6¢ more for margin (that’s the difference between their cost of refined gasoline products and the wholesale price to retailers).
3. Margin pays for the wholesaler’s operating expenses and profit. The wholesaler can add another 2¢ a litre for delivery costs and then the government moves back in to tack on the 14% HST. That’s another 14.07¢ a litre.
4. Retailers need to make money so they are allowed to add another 5¢ a litre.

Now here’s the problem. All the above adds up to $1.19.57¢ a litre.

Last week, the Government’s posted cap price for the week was $1.12.4 a litre plus 2¢ a litre for delivery. The only player in the chain who has no control over cost is the retailer.

Using my example above, there is nothing left for the retailer and that’s what all the fuss has been about this week. That’s why retailers closed their doors. Even with the increased price cap this week, up to $1.16.5 a litre, including delivery costs and assuming no increase in the base price there would only be 3¢ a litre left for the retailer.

For some that may be enough but for others it is not.

So why would a government go to such great lengths to create such headaches for itself?

One can only guess that some political motivation caused them to jump blindfolded into this regulatory mess. Maybe it was pressure created by a bunch of government friendly lawyers who wanted to re-write the Acts that govern price capping and tax rebating.

And what about the tax rebates?

Assuming they make good sense, wouldn’t it be logical that NB Power be asked to remove the tax at source so that people wouldn’t have to collect receipts and fill out rebate applications?

Wouldn’t it be a lot more efficient and a lot less expensive for NB Power to remove the tax from their bills before it was ever collected?

Wouldn’t the burden for people on fixed incomes be lessened by removal of the tax at source?

There can only be one logical reason for this rebate program. It’s either a temporary program or it’s a misguided attempt to create government jobs.

Based on the evidence, it’s hard to believe in retrospect that such an interventionist government was not responsible for the Colsen Cove Orimulsion fiasco as it once claimed. It’s hard to fathom how a bunch of political folks could promote free markets and lower taxes on the one hand and cap fuel prices on the other. It’s also short-sighted.

A more progressive move would be to let prices rise. Maybe a carbon tax could be added to reduce demand for gasoline and eliminate some of that greenhouse gas in the environment.

More disturbing is the financial burden being created by the government’s interventionist policies. With the capping of electricity prices, NB Power will lose an estimated $36 million a year.

The tax rebate will cost the government more than $100 million a year in lost revenue and who knows what cost for processing the rebates.

Gasoline regulation may drive retailers out of business. Enforcement of regulations will add cost for the government. Worse, it will have no significant affect on the cost of gasoline because that cost is largely controlled outside of Canada.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com