Why N.S. gas stations and wholesalers can — for now — sell gas for 3 cents a litre more

Gas prices at the pump in Nova Scotia may see an increase starting today, thanks to an interim order issued by the Nova Scotia Utility and Review Board. The order allows retailers and wholesalers to charge an additional three cents per litre for gas. However, this raise may be offset by any decreases in market prices.

The decision to increase the wholesale margin was made by the gas price regulator due to concerns of a potential gas shortage in the province. Without this action, there was a worry that retailers and wholesalers would struggle to afford selling gas, potentially leading to a crisis.

One of the businesses that applied for the three-cent margin increase was Steve R. Murphy’s Auto Services, a mid-sized automotive service company in Halifax. Owner Stephen Murphy expressed the challenges they have faced in keeping gas as part of their business, as it has been a significant drain on their finances.

The shrinking profit margins for wholesalers and retailers have been a growing concern. The unregulated rack price, set by refiners like Irving Oil and Imperial Oil, has been steadily increasing, cutting into the profit margins of businesses. This has led to profit margins dropping below one percent for companies like Steve R. Murphy’s Auto Services.

Eileen Murphy, who handles finances for the company, mentioned that this decline in profit margins is unprecedented in the past four decades. The UARB has initiated an investigation into the reasons behind this trend and whether any permanent actions are necessary in the future.

While the increase in gas prices may impact Nova Scotians, the potential closure of gas retailers could have a more significant impact. Small, independent retailers in rural areas may struggle to cover the costs of maintaining their business, leading to potential closures. Additionally, wholesalers may choose not to renew supply contracts with these smaller retailers, further exacerbating the issue.

The interim order will remain in effect until further notice, pending the results of the investigation. A public hearing has been scheduled for August 6th to address these concerns and determine any necessary actions moving forward. Stay tuned for updates on this developing situation.