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Monday, February 02, 2009

AIMS releases their study on regulated markets
...and how about something constructive for a change?

Media release

Conception Bay South, NL, February 02, 2009- The Atlantic Institute for Market Studies has released a report on what regulated markets are costing consumers in Atlantic Canada and George Murphy of the Consumer Group for Fair Gas Prices is hearing things in the report that he has heard before. He’s just waiting on the AIMS Group to come out with something constructive.

“The AIMS group came out with a report this morning that says regulation has cost the taxpayer in Newfoundland and Labrador several million dollars. If they had done their research, the AIMS group would have found that regulation costs the consumer of the province less than a half million bucks a year and amounts to .0007 cents a litre at the pumps and not the estimated 1.5 cents that the group used to construct its report”, said the researcher for the group.

“It also uses the Canadian Association of Petroleum Producers (CPPI) as one of its sources of its report. The CPPI is a representative group of the oil companies so, I have to question the use of such information that AIMS has used. It’s not the first time they’ve spouted off on the costs of regulation but, we have yet to hear the constructive arguments from them on what to do to get some free competition going in the province- the chief reason why we have regulation in the first place. They also don’t advocate the dropping of some of the taxation component on gasoline that helps elevate the price at the pumps.

“It is important to remember that regulation in Newfoundland and Labrador regulates the maximum price that any product can be sold for. There is nothing to stop any company from selling their product for less than that and that’s where the consumer loses. Besides the immediate CBS area, the companies have always failed to sell gasoline below the regulated minimum set by the PUB. Why? Can the Atlantic Institute for Market Studies tell us that or are they tainted by the influences of the same people they are getting their information from? Are they saying that Big Oil should be the final arbiter in the setting of pricing?

“Can the AIMS group give us something we can use? Who is paying the tab on this latest ‘scoop’? Toronto prices are low because of a free market system called competition that still exists in the area. Small mom and pop operations still drop gasoline prices because there is a margin to do so of some fourteen cents a litre and big mainstream companies are forced to compete with them. The age of the small mom and pop operation in Newfoundland and Labrador died a long time ago and competition is dying in a lot of other areas of the country where mom and pop operations are being forced from the markets. That’s one reason why the province was forced to enact legislation back in 2001 to regulate the market. If the AIMS group had done its research, it would have had several explainers as to why we ended up with regulation in the first place. This release of theirs is flawed and also misinforms the public.”

“I would encourage the AIMS group to look at several issues pertaining to petroleum pricing itself.
*How does a market, where competition has been destroyed, restore it?
*Address taxation issues.
*Use different and argumentative sources. We had no call from the AIMS group so, we don’t know who was called otherwise, and we would have given them good arguments why regulation is in place.
*Why doesn’t the AIMS group study the effects of “reciprocal sales arrangements’ on markets where there is basically one or two sources of supply?
*Why does the AIMS group not lobby for changes to the Competition Act?


For more information, contact;

George Murphy’
Group researcher/Member
Consumer Group for Fair Gas

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