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Atlantic Convenience Stores Association

Retailers not celebrating 10 years of gasoline regulation

July 11, 2016
By

It was ten years ago that the then government of Bernard Lord legislated petroleum price regulation in New Brunswick. Fast forward to a milestone anniversary of regulation this week and some pundits are celebrating its “success” and how consumers have benefited from lower gas prices.

 

Well, gasoline retailers in the province aren’t celebrating. And while the sky may not have fallen as critics of regulation were warning 10 years ago, the economic picture is far from rosy.

 

Most consumers don’t realize that retail gasoline is a money-losing business unless you’re pumping big volumes. But retailers are caught between a rock and a hard place because retailing gasoline generates store traffic. And if you’re not going to sell gas, the retailer down the street will, and you’ll lose both your store traffic and your business.

 

So, for the past 10 years, retailers have been working earnestly to cut costs – mostly by chopping staff and staff hours – and finding ways to increase non-gas revenues so those profits can pay for the losses on retailing gasoline. But non-gas retailing isn’t peaches-and-cream either, so it’s getting harder and harder to drive those sales that pay for the retail gasoline losses.

 

By just about any metric, New Brunswick is not an attractive environment for investing in a business that retails gasoline. And if you don’t believe that, go talk to some retailers who are trying to sell their businesses. New site decisions are heavily influenced by locations with the highest volume potential, while refurbishments on existing sites keep getting deferred until it’s an absolute must-do situation. And when that time comes for more and more retail locations as time goes on, the doors will just be shuttered because there will be no chance of recovering the size of investment required.

 

If government is going to regulate an industry, there has to be a reasonable and fair balance between the interests of suppliers and users. That’s not the case in New Brunswick, but it’s a different story in Nova Scotia and Prince Edward Island, who adopted different frameworks when regulation was introduced in those provinces. And, all-in-all, it’s been a win-win outcome for everyone under those frameworks.

 

The New Brunswick government seems to be pretty committed to the current regulatory framework. So the industry will motor on, the strong will survive and the weak will fold up shop. That’s life in any business, but it’s not fair to have to fight the added burden brought on by unfair regulation.

 

Mike Hammoud, President

Atlantic Convenience Stores Association

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