New federal clean fuel standards account for 6.6 cents on the price per litre of gasoline sold in New Brunswick, but just who is responsible for that increase remains a matter of debate.
Duelling advertisements on the province’s airwaves lay the blame in different places. Taxpayer-funded ads from the government of New Brunswick blame the clean fuel standards themselves, while a more recent ad from Environmental Defence blames the provincial government and Irving Oil.
“The price of gas is going up. Why? Because Irving Oil doesn’t want to invest in modernizing its refinery to make cleaner fuels,” the latter ad says.
“Irving has enough money, they should pay, not you.”
Keith Brooks, programs director at Environmental Defence, says the organization’s ads are an effort to show who is really behind the increase in gas prices in the province.
“We felt that New Brunswickers should know that the price at the pump is going up as the result of a request that was made by Irving that was granted by Premier Higgs and not really as a result of … the clean fuel regulations themselves,” he said.
“We wanted to set the record straight really and let New Brunswickers understand that this price increase isn’t justified and it’s not because of the need for action on climate change.”
As of July 1, the price on carbon accounts for 11 cents per litre of gasoline. But the controversy surrounds the 6.6 cent “carbon adjuster.” That clause was added to the Energy and Utility Board’s (EUB) price-setting mechanism this year, following a change in legislation from the provincial government. It allows the EUB to pass costs incurred by producers and suppliers from the clean fuel standard onto consumers, based on a formula proposed by an Irving-hired consultant during public hearings.
The federal government has said the point of the new regulations is to make suppliers and producers of gasoline invest in cleaning up the production of fuel. The costs and charges related to the regulations were expected to be borne by the companies themselves, with little to no increase in prices at the pump for a few years. The Parliamentary Budget Office says the regulations will result in an increase of 17 cents per litre by 2030, while the government puts that number somewhere between six and 13 cents.
Fuel producers are able to offset charges from the regulations by investing in cleaner fuel production, building infrastructure like electric vehicle charging stations or purchasing carbon offsets.
The price of those carbon offsets in California is what the EUB’s carbon adjuster formula is based on.
The province’s radio advertisements argue that the carbon adjuster was a necessary step to protect smaller independent fuel retailers from increased costs caused by the federal regulations. That’s an argument that was used by Minister of Energy and Natural Resources Mike Holland to defend the carbon adjuster during question period in June.
“Mr. Speaker, how dare the member opposite try to turn something as important as a protection measure for small businesses in New Brunswick into some sort of big conspiracy theory about Irving? It is very frustrating to see misleading conversations like that take place,” Holland said while responding to questions from Green Leader David Coon on June 14.
“There are large petroleum companies here in New Brunswick. They can handle the absorption of a great deal of stuff that small businesses cannot.”
Holland did later acknowledge to reporters that Irving Oil will benefit from the carbon adjuster, but said that since the company only sells 20 per cent of its fuel in the domestic market, it can only offset 20 per cent of the costs from the clean fuel regulations.
Brooks says the claim that the adjuster is aimed at independent gas stations doesn’t hold water, since the clean fuel regulations aren’t aimed at retailers, but rather at suppliers and producers.
“The clean fuel regulations do not regulate smaller retailers, they are specifically regulating the oil refineries such as Irving Oil. That’s who needs to comply in this case — it’s not the smaller retailers, it’s the large refineries,” he said.
The province did not make anyone available for an interview or provide a statement on the intent of the radio advertisements. A spokesperson did say that the campaign costs $99,000 and will run for seven weeks on radio, on social media and in newspapers. It began July 1.
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