A Nova Scotia-based think-tank says gas price regulation has taken millions of dollars out of the wallets of drivers in Atlantic Canada, but an economist says the report is filled with factual errors and the methodology is flawed.
All four provinces in Atlantic Canada have regulated gas prices. The Atlantic Institute for Market Studies (AIMS) recently released a report looking at the difference between what consumers paid for gas and what they would have paid if prices weren’t regulated.
By its calculations, this has cost consumers $205.9 million since each province instituted regulation. The think-tank is calling for the end of gas price regulation.
The report received extensive media coverage, most of which parroted the report’s findings, including some coverage by CBC News.
“It’s an incredibly low-quality piece of work, which I would reject from an undergraduate student,” said Rod Hill, an economics professor at the University of New Brunswick in Saint John. “All of the headline numbers in that report are wrong.”
As part of its report, AIMS calculated what it called “marketing margins” — the difference between what consumers paid at the pump and the New York Harbour spot price for gasoline.
Generally, the report found, that margin was higher after regulation. In all, the group concluded regulation had cost Atlantic Canadians $205.9 million.
The problem, Hill said, is when AIMS made adjustments for inflation, it used a U.S. price index, not ones for individual provinces. He noted a previous AIMS report in 2009 didn’t even adjust for inflation.
Hill has long been at odds with AIMS over its gas price reports. In 2009, he countered an AIMS study with a report of his own called Debunking the Myth That Gas Price Regulation Robs From Consumers. He found there was little to no cost to consumers…