HALIFAX - Nova Scotia's gasoline regulator began hearings Monday into popular promotions that offer motorists a few cents a litre off their next fill-up - a practice some say is hurting rural retailers.
The Utility and Review Board will examine a number of aspects surrounding the promotions, including their impact on the marketplace and the bottom line of retailers.
The board will use the information it gathers to make recommendations to Service Nova Scotia, which still regulates the promotions even though the department passed responsibility for setting gas prices to the board last fall.
The issue essentially pits a number of corporate giants against some rural gas retailers who maintain they are placed at a competitive disadvantage.
Graham Conrad, of the Retail Gas Dealers Association of Nova Scotia, said there are concerns about the impact when large corporate entities such as Irving and Sobeys can team up to provide cheaper gas through grocery purchases.
"When you look at the largest food retailer working with the largest gasoline retailer, the resources are substantially different than the resources that would be available to your average service station in rural Nova Scotia, especially," he told reporters.
However, Conrad could only say that it was a "mixed bag" in terms of assessing whether the promotions are hurting the bottom lines of rural retailers. And although he admitted many retailers actually want and need promotions to stay competitive, he added that his organization is concerned about the nature of deals such as the one between Irving and Sobeys, in particular.
"It's unique from the point of view that the promotion is built around buying a product other than gasoline and getting discounted gasoline as a reward," he said. "That's kind of in reverse to the way gasoline promotions have always been done in the past."
But the board's consumer advocate, David Roberts, said there is no evidence from the studies he's examined to suggest that gas discount promotions have hurt rural dealers.
"The rural dealers that they've dealt with have not been affected by promotions because they're so isolated that people aren't going to drive 30 kilometres to save two cents a litre," said Roberts.
He said the discounts have proven popular with consumers who are looking for ways to save money and he sees no reason why the province should continue to regulate them.
Roberts pointed to New Brunswick and Newfoundland and Labrador, where gasoline prices are also regulated but promotions are not.
"If I go and buy my groceries at Sobeys and then go buy gas at Irving, I can save nine cents a litre in New Brunswick and five cents a litre in Nova Scotia," he said. "So I don't see any downside in the evidence and there are obvious advantages to consumers."
During Monday's hearing, Don Mills of Corporate Research Associates was cross-examined on a recent study he carried out for Irving Oil Marketing GP.
The study found that the convenience of location topped a list of the most important reasons why motorists choose to get their gas at a particular outlet, followed by price and then special promotions or discounts.
But Mills told the hearing that his study also suggested that 82 per cent of respondents had taken advantage of some form of special incentive program within the past month.
"That's as close as you can get to universality of use in terms of the research market," said Mills. "It's so widespread that, from a personal point of view, I don't know how the government could deal with taking it away."
But Michael Wood, a lawyer representing Wilson Fuel, questioned a system he said benefited certain sectors of the market because of their size or business opportunities.
"In a regulated environment, to have partial price competition that's only available to certain of the players, from my client's perspective is a concern," said Wood.