New gasoline levy being charged in N.B. to help refiners can be traced despite baffled officials

Publicly available petroleum pricing information suggests a new "cost of carbon" charge on gasoline and diesel authorized by the New Brunswick government raised prices to consumers by more than $7 million in August.

It also shows that at least some charges that have been collected from gasoline customers to pay for increased refinery costs were not used for that.

Two weeks ago New Brunswick government energy officials told a committee of MLAs it was not clear to them what was happening with a new provincial petroleum charge that took effect in July.

But deputy natural resources and energy development minister Tom McFarlane said if consumers have been overpaying, there will be no rebates.

Fundy-The Isles-Saint John West PC MLA Andrea Anderson-Mason questioned provincial energy officials on who was benefiting from a new petroleum charge on consumers that took effect in July. (Jacques Poitras/CBC)

"It's into the system. There's not a mechanism to recoup it that I know of," he told MLAs.

In July New Brunswick motorists began paying a new charge created by the province for petroleum products to help oil refiners deal with new federal "clean-fuel" regulations that are separate from carbon taxes.

The charge is calculated and set by the New Brunswick Energy and Utilities Board. The amount is adjusted weekly but has hovered above and below six cents per litre on gasoline since its creation.

Charges on diesel have also varied, moving above and below seven cents per litre.

They are significant amounts.

In New Brunswick motorists and businesses buy about one billion litres of gasoline and 400 million litres of diesel each year. Every one cent increase in price adds $15 million in annual costs to New Brunswick users.

Under questioning from Fundy-The Isles-Saint John West Progressive Conservative MLA Andrea Anderson-Mason earlier this month, energy officials acknowledged they have not been tracking if those new charges are going where they were intended — to pay for increased refinery costs caused by the new federal regulation.

"Shouldn't we be aware of that — where that's going?" asked Anderson-Mason, who was told that information is not available to government.

Earlier this month New Brunswick government energy officials including natural resources deputy minister Tom McFarlane, left, and the director of the department's energy division Heather Quinn told MLAs they didn't know to whom consumers were paying a new carbon charge. (New Brunswick Legislative Assembly)

"Where it shows up between the retailer and the wholesaler and the refinery, I don't know," said McFarlane.

"It's not something we can track. It's private information, it's private companies, so it's not publicly available," added Heather Quinn, the director of the department's energy division.

But that's not entirely the case.

Publicly available information compiled by the New Brunswick Energy and Utilities Board and the national energy information company Kalibrate does allow tracking of petroleum prices and where charges are added.

That information shows while the new cost-of-carbon charge levied on diesel in New Brunswick has been fully going to refiners as intended, charges on gasoline have been partially diverted to other uses.

Under current New Brunswick petroleum regulations consumers pay a price for gasoline and diesel that includes a base or "benchmark" amount set by large-scale trading in U.S. petroleum markets. Added to that are allowable wholesale and retail markups.

Separate from those markups, retailers can also add in the cost of having fuel delivered to their locations — but only the exact amount they have been billed.

Provincial and federal sales, excise and carbon taxes are then folded in.

By agreement several oil refiners wholesale products to customers from loading racks at the Irving Oil refinery. As a group their markup on gasoline prices has increased about 3.5 cents since July, although consumers have been getting charged six cents more. (Mike Heenan/CBC)

In June, prior to the new cost of carbon charge, wholesale and retail markups on gasoline in New Brunswick were limited to just under 15 cents per litre. Since July, with the new charge added, allowable markups have risen to about 21 cents for gasoline and 22 cents for diesel plus delivery costs.

Since the cost of carbon charge was introduced, consumers have been paying full 21- and 22-cent markups in most of the province's petroleum markets according to pricing information collected and published daily by Kalibrate. 

However, while the new higher markups on diesel have all flowed to refiners as intended, that has not been the case with gasoline.

In August in Saint John according to Kalibrate's data, tankers being loaded with gasoline at the Irving Oil refinery were paying markups of about 3.5 cents per litre higher than they had in June. 

That is only a portion of the extra six cents consumers are paying in new gasoline charges to help refiners. The balance has flowed to wholesalers and retailers.

McFarlane said although his department is in the dark about whether consumers are being fairly treated by the new levies, he told MLAs the Energy and Utilities Board has committed to reviewing whether amounts should be adjusted soon.

"I don't think the EUB would say we got it 100 per cent right," said McFarlane. "What they've said is they are going to review it before the end of the year."