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
"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."
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 also says the math represents a major flaw.
The report relied on Statistics Canada gas consumption numbers, but understated them by a factor of 1,000, Hill said. He also said the decimal point used in the marketing margin was in the wrong place.
All told, it meant AIMS' numbers were off by a factor of 10, he said. For example, while AIMS calculated the cost to Nova Scotians at $18.2 million since 2009, it should have been $182 million if the report is to be taken at face value, Hill said.
