HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Ms. Diana Whalen (Chairman)

Hon. Judy Streatch

Mr. Keith Bain

Mr. Chuck Porter

Mr. Howard Epstein

Ms. Vicki Conrad

Mr. Leonard Preyra

Mr. David Wilson (Glace Bay)

Mr. Harold Theriault

[Mr. Howard Epstein was replaced by Ms. Joan Massey.]

[Ms. Vicki Conrad was replaced by Ms. Michele Raymond.]

[Mr. David Wilson (Glace Bay) was replaced by Mr. Michel Samson.]

IN ATTENDANCE:

Mrs. Darlene Henry

Legislative Committee Clerk

WITNESSES

Retail Gasoline Dealers Association of Nova Scotia

Mr. Graham Conrad, Executive Director

Mr. Roy Pettigrew, Secretary Treasurer

Owner/Operator Amherst Petro-Canada

HALIFAX, TUESDAY, FEBRUARY 6, 2007

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Ms. Diana Whalen

MR. CHUCK PORTER (Chairman): Good morning, everyone. We'll call this meeting to order. It is 9:00 a.m., and we like to get started on time. As per usual, we'll start with introductions.

[The committee members and witnesses introduced themselves.]

MR. CHAIRMAN: Good morning and welcome. It's great to have you here. We'll get right into it. We'll let you start with your opening remarks and presentation. You can take about 15 minutes, if you like, and then we'll have some questions.

MR. GRAHAM CONRAD: Good morning. My name is Graham Conrad, as I said, and I'm the Executive Director of the Retail Gasoline Dealers Association of Nova Scotia. For the record, the Retail Gasoline Dealers Association of Nova Scotia has been the voice of the retail gasoline dealers and has represented the motoring public for almost 60 years now. I've brought along several copies of our 40^th Anniversary publication that I think you might find interesting. I gave that to Mrs. Henry.

Joining me today, the original plan was to have Daniel Thimot, who is the president of our association, an Esso retailer from Meteghan Centre in Digby County. Daniel was unable to make it because of the weather that they ran into yesterday. With me this morning is Roy Pettigrew. Roy is a Petro-Canada retailer from Amherst. I was also expecting, as indicated in my presentation, a local retailer, Wayne Pace, who is a Shell retailer in Halifax.

We appreciate the opportunity to be here today. On June 9, 2005, we appeared before the Standing Committee on Economic Development, and presented information on behalf of Nova Scotia's independent gasoline retailers, recommending the reintroduction of the petroleum products pricing regulations. Today we appear before the committee with information that we feel is strong justification for the retention of regulations as they currently exist. For our presentation today, we have prepared a schedule of chronological events over the past three years that have led to and justified the need for reintroducing pricing regulations. In this way, I think we can better connect the significant historical events with current outcomes and, therefore, better understand the impact from regulations upon the industry and all stakeholders. We believe this makes it easier to measure, objectively, the value and benefits from regulations, the state of the industry and economic impacts within the province.

The "Event Timeline", as we refer to it, begins in 2003, when the majority of independent retailers within the industry reported declining margins, frustrations and lack of understanding with oil company pricing practices. During 2003, retailers throughout the province demanded government assistance. Retailer margins were insufficient, resulting from constant, unpredictable price fluctuations, thereby making it impossible for independent retailers to remain viable. In 2003, Nova Scotia prices were rising faster than P.E.I., which was a regulated market. Nova Scotia prices, excluding taxes, for 2003 were higher than national prices almost 70 per cent of the time. Retailers lobbied hard for government action, for regulations similar to P.E.I.

During 2004, in May, the government appointed an all-Party select committee to review pricing and practices within the industry. In June and July, public meetings were held around the province to get stakeholder and public input. At that time, 100 retailers, primarily rural Nova Scotia retailers, were estimated to close without some sort of government intervention. In August 2004, the all-Party select committee report recommended pricing regulations similar to P.E.I. Nova Scotia prices, again excluding taxes, were higher than national prices almost 70 per cent of the time. During 2004, the MJ Ervin & Associates weekly survey data report indicated gas price increase averages of 8.5 cents a litre for Halifax, compared to 7.5 cents a litre for P.E.I. over the previous year.

During 2005, in May, in the Spring sitting of the Legislative Assembly, they unanimously voted for Bill No. 79 to empower the government to regulate the industry. In August 2005, Gardner Pinfold was hired to study the industry. In September, the Gardner Pinfold study report made no recommendations, but suggested pricing regulations as an option. During 2005, MJ Ervin & Associates weekly survey data reports, again, gas prices, excluding taxes, increased 9.8 cents a litre in Halifax, compared to 8.2 cents a litre in P.E.I. Again, Nova Scotia prices, excluding taxes, were higher than national prices almost 70 per cent of the time.

In January/February 2006, a corporate research study indicated the majority of Nova Scotians favoured pricing regulations. In February, an Omnifacts Bristol survey indicated 78 per cent of Atlantic Canadians favoured pricing regulations. Government appointed a high-profile mediator to help oil companies and retailers negotiate industry-driven solutions to low retail margins and oil company pricing practices. Those efforts failed. In June 2006, Nova Scotia prices, excluding taxes, were higher than national prices over 70 per cent of the time. Nova Scotia prices, excluding taxes, compared to P.E.I. were lower 14 of the 26 weeks, or 54 per cent of the time from January to June, Nova Scotia prices were lower. July 1^st, the Petroleum Products Pricing Regulations were introduced. Nova Scotia joined New Brunswick, Newfoundland and Labrador, Prince Edward Island and Quebec with regulations. Ontario is currently reviewing the possibility.

It should be noted that regulations were never promised by government to lower prices. Instead, they were designed to provide stability and predictability and improved margins for rural Nova Scotia retailers. Shortly after regulations, oil companies, media critics and opponents of regulations launched a media blitz against the government decision. The government gave retailers four months to decide which option to select under new regulations and to negotiate with their oil companies. The Nova Scotia Utility and Review Board was appointed to assume the management of regulations.

In September, the Nova Scotia Utility and Review Board conducted public hearings. Oil companies refused to intervene or be cross-examined. Wilson Fuel refused to pay cross- leases to retailers who opted for regulations. Wilson Fuel threatened retailers with supply if they opted for regulations. It should be noted that a combination of Wilsons and Esso, has the largest number of retail outlets in the province, more than Irving, and more than Shell and Petro-Canada combined.

In October 2006, criticism of regulations were primarily centred around Roger Taylor from the Halifax Herald; Michel Samson, Leader of the Liberal Party; and David Collins, Vice-President of Wilson Fuel. Oil companies were slow to co-operate with retailers, thereby making the option decisions very difficult. In November, media reported oil company record-breaking profits; criticisms again of regulations, primarily centred around Roger Taylor, Halifax Herald; Michel Samson, Liberal Leader; and David Collins from Wilson Fuel. Shell, Petro-Canada and Irving, in November, agreed to negotiate cross-leases with retailers who opted for regulations.

Over 60 per cent of independent retailers opted for regulations. Of 446 total outlets in the province at that time, 125 were oil-company owned and operated. Regulated margins may now provide oil companies with 11.5 cents a litre on self-serve. Independent retailers may now earn 5.5 cents a litre on self-serve. Oil companies, excluding Wilson Fuel, agree to pay eligible retailers cross-leases to rent their sites. RGDA survey, 200-plus retailers, responses indicated over 79 per cent of their

customers, the motoring public indicated they now prefer regulation. That same survey indicated 80 per cent of the retailers suggested that price zones as they currently exist are not having a negative impact on their business, and that rural retailers' prices are more competitive. Wilson Fuel notified 12 Esso retailers who opted for regulation that their supply is terminated immediately. One week later, delivery schedules were back to normal.

In December 2006, MJ Ervin & Associates weekly survey data revealed average price increases for Halifax of 5.4 cents a litre, compared to 5.8 cents a litre in P.E.I., thereby reversing a three-year trend. Nova Scotia prices, excluding taxes, were higher than national prices only 42 per cent of the time since regulation as compared to 70 per cent of the time for the past three years. Nova Scotia prices, excluding taxes, were lower than P.E.I. 19 of the 26 weeks following regulation; in other words, 73 per cent of the time as compared to 14 of 26 weeks, or 54 per cent prior to regulation. Most oil company independent retailers, excluding Wilsons, report to the Nova Scotia Retail Gasoline Dealers Association their satisfaction with regulation.

The year 2007, the government, as we all know, has agreed to a Liberal Party request for a review of regulation to be completed by March 31^st of this year. Gardner Pinfold has been hired to study the impact from regulation. Just some industry statistics that I think are significant: the last year of regulation, which was 1991, there were 925 retail outlets, and as of December 2006, there are 440 retail outlets. During the period 2003 to 2006, which is the period when all of this issue began - 88, or 17 per cent - there was a 17 per cent net reduction in retail outlets in Nova Scotia, from 529 down to 440. In P.E.I., during the years 2002 to 2005, which are the most current numbers available, seven, or a 6 per cent net reduction in retail outlets; in other words, 115 down to 108.

The evidence is clear that post-regulation has produced lower prices, faster reductions, and greater stability in Nova Scotia than the pre-regulation period. The rate of retailer close-outs has declined since regulation. During the period of June 2004 to June 2005, there were 48 closures, averaging four closures a month. These closures are accumulating. So, as I read them, it's important to note that the number you see beside each date is not the actual closure, it's the accumulated closures. The rate of closures, if you wish, has gone from four a month during that first period of June 2004 to June 2005, down to less than two a month since regulation was introduced. So far in 2007, to the best of our knowledge, there has been only one closure.

The rate of price changes has declined since regulation. Looking at the year 2005, there were 98 price changes. From January to June, pre-regulation, there were 64 price changes. From August to December 2006, there were 15 price changes. XTR Energy, an oil company, is expanding rapidly in Nova Scotia. They are now up to 24 locations, and they are expanding in Prince Edward Island, as well. They have their first outlet, and three others that they're negotiating with. Wilson Fuel's opposition to regulation appears

restricted only to Nova Scotia. There's no sign of opposition in P.E.I., where regulations are very similar to Nova Scotia. Average annual gasoline sales per outlet, for the record, in P.E.I. is 1.8 million litres a year. In Nova Scotia, the average through-put is 2.7 million litres a year.

[9:15 a.m.]

In summary, based upon the significant events and outcomes over the past three years, we feel petroleum products pricing regulations are more than meeting the objectives as they were established. In our view, without regulations, the industry, especially rural Nova Scotia, would continue to experience a decline in competition, decline in service levels, reduced employment opportunities, and very unfavourable climate for independent retailers. The negative impact upon Nova Scotia's tourism industry would continue to grow. The unnecessary financial and human hardships suffered by so many more retailers who would be forced to close their businesses for reasons beyond their control would be pointless and should be prevented.

Once again, we thank you for the opportunity to be here today to express our views on this very important issue. Thank you.

MR. CHAIRMAN: Thank you, Mr. Conrad, and maybe just before we go to questions, we'll get the other two members to introduce themselves. Ms. Streatch, we'll start with you.

HON. JUDY STREATCH: Well, thank you. You mean I wasn't the only one who was late, Mr. Chairman? I appreciate that. Good morning, thank you very much. I'm Judy Streatch, the MLA for Chester-St. Margaret's. I apologize for being a bit tardy but when a seven o'clock meeting turns into an eight o'clock meeting, that makes you a bit late for your nine o'clock, so I apologize and thank you very much for being here today.

MR. MICHEL SAMSON: Thank you, Mr. Chairman. I'm Michel Samson, MLA for Richmond, interim Leader of the Liberal Party and it's Michel, just for the record, not Michael.

MR. CHAIRMAN: Very good. We'll start with the NDP caucus for questions.

Mr. Preyra.

MR. LEONARD PREYRA: Well, thank you very much, Mr. Chairman, and thank you, Mr. Conrad, for coming here today, and thank you especially for a very good background briefing note on the history and evolution of gas price regulation in Nova Scotia and the rationale for it. I take your point that the regulations were established to reduce dramatic fluctuations in the price and to reduce the instability itself and also to

address the price differentials between the various provinces, especially here in Atlantic Canada. Your argument is that by and large gas price regulation has addressed those issues.

I wanted to talk a little bit, though, about changes in the regulations because as you know, those regulations are being reviewed at the moment and we expect a report in March. I wanted to get some sense from you as to what in the regulations needs changing and, if you don't mind, maybe I can go through some of the more specific concerns that people have expressed about regulations, without challenging the regulations themselves.

Let me start with a couple of things that you've already addressed but I'd like some clarification on, and that is the question of access, particularly in rural Nova Scotia, to gasoline service at a variety of times and at a variety of locations, and also the question of full-service stations where a number of seniors and people with disabilities and other people are saying that the number of full-service operations related to self-service has declined as well. I wonder if you can talk about those questions of access, especially in rural Nova Scotia, in regard to seniors and people with disabilities and how we go about addressing that, if we're going to change the regulations.

MR. GRAHAM CONRAD: Mr. Chairman, in terms of access, I guess what is critical is that the network that exists right now, I won't say should be protected because I don't think it's the role of government to protect industry, but in terms of levelling the playing field and making sure that the skills required to run a business are within the power of the average individual business person, that climate has to be there.

What we have had in the past, and we still have today with Wilsons/Esso retailers, we have a situation where a retailer cannot tell from one day to the next whether or not he is going to be making a profit, so there's no planning, there's no cash flow understanding, there's no way of determining employment levels if you don't know from one day to the next whether or not you're going to make a profit. That may not be so bad if, with all the fluctuations, the net effect is that there is a profit, but in the situation we've had over the last three years that wasn't the case.

The situation over the last three years, which I think is an established matter of record now, is that there were situations where retailers were making negative margins. Regulation has eliminated that so the environment that exists right now for those retailers who are on regulation, and many retailers who are not on regulation who are now getting a better deal from the oil company as a result of regulation, so that spinoff effect has occurred, too.

The environment now is far more positive and perhaps Roy could be commenting on this more than me, but retailers have a better sense of confidence in the industry now

than they have ever had before so the desire to stay in business, or perhaps to expand the business, is stronger under this regulation than it would have been otherwise.

MR. ROY PETTIGREW: There are a couple of comments that I'd like to address, one would be on your question of rural areas. Since regulation, in our area I know of two stations that have opened, actually one being a Wilsons in Wentworth Valley - there were two stations or three stations there, they've all closed - and there's now a Wilsons open there. One that has been pretty hot in the press lately is the one in Parrsboro, an Esso there that has been closed for several years and now they see a chance to reopen in an area where there's only one service station in the whole Town of Parrsboro, now it looks like we may have two, if the environmental issue can be settled.

I believe the rural areas now - and I know of one in River Hebert who was really looking at closing his doors and now he's making a living and he's going to stay. So there are three stations that probably would have been gone this year - one wouldn't be there and the other two would probably be gone if it wasn't for regulation.

MR. GRAHAM CONRAD: If I could just make a point, we are not necessarily talking small volume stations here, okay. Some of the stations that we're talking about are stations that pump in excess of 2 million litres a year, so the situation is not strictly exclusive to the really small businesses; it's not, it goes beyond that.

With respect to the issue on full-service, the regulations as they exist right now, recognizing full-service really doesn't make sense to have a minimum margin of 4 cents a litre for full-serve, up to a maximum of 7.5 cents a litre, the 7.5 cents makes some sense. Self-serve margins are a minimum of 4 cents, up to a maximum of 5.5 cents. So you have a situation where depending on the pricing going on around you, and we've had situations - Lyons Brook in Pictou County - where a corporate site was serving gasoline at self-serve minimum prices.

So if the minimum margin - and this has all been justified through information gathered over the years - if the minimum margin required for self-serve is 4 cents a litre, how could you possibly expect a retailer to pump gasoline for 4 cents a litre? So the minimum margin for full-serve doesn't reflect the fact that if a retailer is pumping gasoline and is making 4 cents a litre, he's on his way out of business. They simply have to have a higher bottom level for full-service, in order to justify or provide an incentive for a business person to hire, to train, to invest in providing full-service.

A quick solution to that is just simply to change the minimum margin, maybe perhaps change the maximum margin, too. That would definitely address the need to provide retailers with far more margin to provide the full-service and respond to the requests of the seniors and disabled persons who are in need of special assistance.

If the maximum margin on full-serve was 8.5 cents, I don't think that motorists looking for full-service would balk at the fact that it's going to cost another penny to get their tires checked or their wipers checked or their oil checked. So I just think that the numbers don't line up with the reality and the fact that a minimum for self-serve and a minimum for full-serve is exactly the same, doesn't read the reality.

MR. PREYRA: That can be done within the regulations, as they exist now?

MR. GRAHAM CONRAD: I guess so, I guess that would be, you know . . .

MR. PETTIGREW: P.E.I. has a minimum and a maximum for full-serve and a minimum and a maximum for self-serve, which are higher than the self-serve prices on full-serve.

MR. PREYRA: If I could move on, your presentation talks, one of the sub-texts of the presentation is the debate, really, between the oil companies and the retailers and their independent dealers. What is it that motivates that relationship? What's driving it? How do you address that part of the problem? Is there anything that can be done in the regulations that would sort of put that relationship on a more stable basis or a more co-operative basis?

MR. GRAHAM CONRAD: I think, as we've seen since November 1^st, the date at which retailers had to sign on for one of the options, all of the oil companies with the exception of one have changed the way they do business. They have all entered into new agreements or made new deals with their retailers who have opted for regulation and continue to get this cross-lease. I don't want to digress too far in answer to your question, but for a brief explanation, a cross-lease, the way it has traditionally been regarded, is money that a retailer gets for his site, for his physical plant, pumps, tanks, building. It's a real estate rental. It has nothing to do with the difference between what he buys his gas for and what he sells his gas for. That's margin.

Over the last number of years, there has been an enormous amount of confusion that has gone into that definition of cross-leases. It has been tossed in with gasoline margin. So a retailer, a Roy Pettigrew, who invests a couple of million dollars into a retail site, when he goes to market, he's going to rent that building to whichever oil company wants to rent it from him. If he didn't get rental revenue, if he were expected to invest a couple of million dollars to sell gasoline and make 4 cents or 5.5 cents a litre, in other words to have a job, it doesn't make sense.

What has happened is that after November 1^st, all of the oil companies other than Wilsons and Esso have gone back to the traditional way of doing business, where the retailers who opt for regulation are taking whatever margins they want between minimum and maximum, and they continue to get their cross-lease. I do believe that the

situation is going to correct itself with Wilsons, in time. As those contracts with the outlets that they have expire, if Wilsons doesn't come to the plate between now and then, they're going to have to suffer whatever the consequences are of losing those volumes.

MR. CHAIRMAN: Mr. Preyra, you have about two minutes left, and then we'll move on. We'll do 15-minute increments.

MR. PREYRA: I have a question about the URB process itself. People seem to complain that the price, when it goes up, goes up too quickly, and when it goes down, it doesn't go down quickly enough. What would you suggest in terms of improving the regulatory regime, in terms of the frequency of adjustments?

MR. GRAHAM CONRAD: Well, I don't think, in our view, since regulation came into play, prices have gone up faster - well, not faster, but they've definitely come down faster than they ever have in my years of experience in this industry. They have never come down on a long weekend in the past, as they did last year. I think the regulation is definitely bringing prices down faster. In terms of moving prices upward, well, the formula sort of dictates how that takes place. If the question is, should it be weekly rather than biweekly, I don't see that as being much of an issue. It's probably more beneficial to the oil companies to change prices weekly. It just means more price changes, in terms of stability. It would be 52 changes in the run of a year rather than something less than that.

Although I do know that in terms of - and Roy and I have spoken about this - the interprovincial, especially the Cumberland County area, the border, it would be much more beneficial for retailers on the border if both provinces were on the same system. New Brunswick, as we know, now is going to adjust their prices weekly. We still adjust them biweekly here. So it would be more beneficial to have prices in both provinces on the same basis.

[9:30 a.m.]

MR. CHAIRMAN: Mr. Theriault.

MR. HAROLD THERIAULT: Thank you, Mr. Chairman. Thank you, Mr. Conrad, for your presentation. I'm a little torn between what you're saying and what some retailers are saying. You said in the last of your statement here, "In our view, without regulations, the industry, especially rural Nova Scotia, would continue to experience a decline . . ." I just received a letter here from a retailer on Long Island, which is down in the Brier Island-Digby Neck area, 2,000 people on this island, the last gas retailer in that area of Long Island, a couple of thousand people. I have a letter here that he just sent to the Premier - I want to touch on this. I will table this when I'm done working with it here but I just want to touch on it a little bit to let the folks know what

he's saying to the Premier and what he's putting in the people's mailboxes as of today, to tell the people on this island what is taking place with regulation:

"To: Premier of Nova Scotia . . .

Attached is a copy of a letter printed and being prepared for distribution to the residents of Long Island, Brier Island and Digby Neck.

It is our intent to distribute this to each mailbox in the area, both as a notice to the residents of a drastic change in their way of life, but, also as a wakeup call to get off their duffs and make the Provincial Government understand that rural Nova Scotia is in trouble.

You need desperately to get out of the free marketplace. You've studied gasoline regulation to death, and, at considerable expense, and, we all know that it isn't something that will protect the consumer, the retailer or the wholesaler, only the upstream suppliers. There will likely never be enough votes gained nor [sic] lost to make a big difference, the only sure result will be a further deterioration in the quality of rural life.

Yours truly,

Tom Frook"

This is the letter he has put into the mailboxes down there today. I just want to touch on a couple of things and then I'll table it:

"This business has existed since 1917 and has remained a fairly viable operation until recent times . . .

The last straw has been gasoline regulation. The Provincial Government, after spending a lot of dollars on a study, determined that they needed to get involved in the fuel marketplace. You'll remember a year ago that the hope was to regulate prices, however, it's become obvious that all that the Legislation is capable of doing is stalling increases or decreases, we're not a big enough market for the petroleum companies to even be concerned with. Our prices are fixed for us by the Province, not only what we pay, but, what we can charge, and, those prices don't allow enough profit to meet all the expenses associated with fuel, therefore, the rest of the business has to subsidize the gasoline and diesel. The price changes have also led to some rather substantial losses when we're caught with inventory in the tanks when a price change happens, we can't recoup what we paid for the product.

The purpose of this letter is to advise all residents that it is our intent to do away with fuel at this site. We have tried the system, it doesn't work and we've tried and tried to get officials from the Premier and his Cabinet to senior officials to understand the problem, but, we're not big enough, and, we're not an area of interest . . .

Where this leaves things such as Fire Departments and folks who can't/ shouldn't drive off the island, we don't know . . . Should you decide to transport gasoline home from the mainland, please use great care with this product, it is dangerous, and, perhaps against the law to have it enclosed in the trunk of your car."

This is what he's telling the residents of Long Island to do - to lug their own gas home if they go away from the island. There are 193 seniors on that island who drive vehicles on it and haven't been off it for 15 to 20 years and may never get off the island.

Now this is going to the Premier today and it's going to the residents down there. Can you explain that one to the people of Long Island, that regulations are working? Is this man wrong?

MR. GRAHAM CONRAD: Mr. Chairman, it's not a simple explanation. I've never spoken to that individual, I don't think. There are still a lot of retailers out there, especially the small ones in the rural areas of the province, who do not fully understand the implications of how the regulations will work for them. The regulations are providing more margin than existed prior to regulation. It's very unlikely these days that anybody is going to make enough money selling gasoline to do more than keep the place open.

I guess it's reality that what the regulations have done is stopped retailers who were losing money on gas and subsidizing it from other departments that they might have, at least to plug the hole so that they don't lose money selling gasoline, and gasoline can then become, if nothing else, a traffic builder. If he's on the regulations, which I don't know from that letter if he is or he isn't, if he has opted for regulations, he should be earning - if he's full-serve, he should be earning 7.5 cents a litre. My suspicion is he's not. My suspicion is he may not have opted for the regulations. That being the case, he's still in that same quandary where his prices and margins are going up and down and sideways, and it's hard to get a reading on whether or not he's really making money.

With respect to the inventory thing, he's absolutely right. When you buy high and sell low, it's the same old story. Regulations, and with the timing of the reduction in the cost of crude internationally, have led to - it's in one of the attachments that I've given you - a 37 cent a litre reduction since they came into play. If that retailer is not buying his inventory properly, he could very well be losing on every delivery. He could be buying when the price is high, selling when it's low. That happens.

Normally, retailers gain when prices go up and, yes, they lose when prices go down, but normally there's kind of a netting-out effect. It's normally not as extreme as it has been this past six or seven months - that's the normal. What he's saying is very true, that retailers who haven't been able to manage their purchases during this regulation period have been or could have been hit pretty hard, buying and then the retail price goes down. If his volume is low - which it could very well be and very likely is - costs of operating a business are going up and up, minimum wage is going up again. If you're not improving your volume, or adding some sort of another business or at least not losing the money on the gas that you're selling, the future is pretty dismal.

Again, I go back, on the last point, to the discussion we had related to full-service. I think in rural Nova Scotia, really, in the more rural parts of the province, perhaps they should be able to earn more than 7.5 cents, if they provide full-service. The option is still there for the motoring public in that community to drive to the next community where gasoline might be cheaper if they so wish. Perhaps 7.5 cents on full-service, on low volume, in rural parts of the province, it's not enough, perhaps it should be 8.5 cents. But the key is, though, that a retailer has to get out of the environment where they can't tell for sure what the margin is going to be on gasoline. If you're not on regulation, you don't know what your margin is going to be.

MR. THERIAULT: You say it should be higher in rural areas like that.

MR. GRAHAM CONRAD: Full-service, for sure.

MR. THERIAULT: How do we get there, though? This business has been down there since 1917, when the first combustion engine came to Long Island. Here, all of a sudden, in 2007, it's not working. There were two or three combustion engines down there in 1917, and they must have made a profit.

MR. GRAHAM CONRAD: The opposing example - in Digby, you have a beautiful Shell service station there. High volume, one of the highest volumes in the whole county, and they can't make money. They've invested millions of dollars into that place - well, $1 million anyway - and they can't make a go of it. If you sell 2 million or 3 million litres of gas and you can't make a go of it, and then someone sells, in your case, probably 400,000 or 500,000 and, yes, they've been there for a long time, and they can't make a go of it.

MR. THERIAULT: So we're regulating the wrong thing here. We should be regulating ExxonMobil, who, two years ago, grossed a profit of $20 billion. Last year, they grossed $30 billion. This year, they're going for $40 billion, ExxonMobil alone. Maybe that needs some regulation at the top - just like he's saying, the upstream. It's putting rural Nova Scotia in poverty, it's putting Digby, with millions of dollars invested, in poverty, and yet they're going for a $40 billion profit. I think the regulation is wrong

here. If we have to regulate something, we better regulate from the top-down, not from the bottom-up.

Another thing you said, we pay 70 per cent higher than average, or did pay before it was regulated, and now we're only paying 42 per cent more than average. Why does Nova Scotia - and I get this question every day - pay 90 cents a litre here, and gasoline is 65 cents. You can pretty near drive and get a tank, if you had a good car on gas, to the Ontario border, for 25 cents and 30 cents less a litre - 42 per cent you said. Why the big difference in that short of an area in this country?

MR. GRAHAM CONRAD: Mr. Chairman, the 42 per cent I referred to is time; 42 per cent of the time our prices - in other words, 35 weeks out of 52 weeks, for the last several years, our prices have been higher. Since regulation, it's down now to 19 weeks or whatever the 42 per cent works out to.

MR. PETTIGREW: Excluding taxes.

MR. GRAHAM CONRAD: In terms of comparing our prices with Upper Canada - for sure, it's almost impossible. If you don't exclude taxes, that's different, number one, and number two, east of the Ottawa River Valley, all of our product is imported. When you get out West, everything is shipped through a pipeline. The economics are entirely different. Then you look at the size of the market in southern Ontario, there's no way you can compare Toronto with Nova Scotia. I can tell you that one of the attachments that I've included is looking at price reductions in Nova Scotia since regulations came into play as compared to the price reductions with the Canada average.

I can tell you, since regulations came into play in Nova Scotia, we've had a 37.8 cent reduction. The net effect of increases and decreases is like a 16 cent reduction, but the total reduction is only 37.8 cents a litre that our prices have come down since regulation. The Canada average, taken from the same source, is 32.6 cents a litre that prices have come down. So in Nova Scotia since regulations, the prices have come down further than the national average.

MR. THERIAULT: One more - I'd like to get back to the rural areas, again, of this province. You said there may be a solution, or you thought there should be a solution. Can you go more in-depth on that - how we can deal with things like Long and Brier Island?

MR. PETTIGREW: Can I answer that for you?

MR. THERIAULT: Yes, you can.

MR. PETTIGREW: Without regulation, I don't think you could have done anything there anyway. One point that the gentleman made was the last straw was regulation, and I would like to have known what the straw before that was. You have a distinct area there. I've been there. You take two ferries to get there, do you not? I don't think that service station should close no matter what. It's a distinct area. If the province needs to make that a private zone, make it a private zone, but make sure that man has enough money or makes enough money to stay open. Nobody is going to take two ferries to go to the mainland to save a penny, although some will. I think that without regulation, you couldn't have done anything for that gentleman. He would have slowly gone out of business anyway.

[9:45 a.m.]

Now you have the option of making that a distinct area, or a zone of its own, and make sure that he stays open. I assume he is full-service. Prior to regulation, there were very few places in this province, or very few stations in this province where you made 7.5 cents a litre on full-service. Being where he is, he should be getting the maximum; he's got no competition so he should be getting the maximum. If he needs 8.5 cents to stay open, then maybe the province should take a look at that. You have the tools in regulation to do that, where you never had before. You had no protection for him before, he was strictly at the mercy of his oil company, and if his oil company wanted him out of there, he would have been gone long ago.

MR. THERIAULT: But he's saying regulation is stopping him from putting that price up.

MR. PETTIGREW: Yes, it is, but you have the tools to change that.

MR. THERIAULT: But that's something that government has to do.

MR. PETTIGREW: That's right.

MR. GRAHAM CONRAD: If I could just comment again, Mr. Chairman. I think what he's saying is regulation is causing the problem. Regulation is setting the price in his area, right? But if he's not on regulations, he has no control over his margin. If he was on regulations, his margin is fixed just like the price is fixed and the oil company can only charge him a certain amount for his product. Okay? If he's not on regulation, the oil company can charge him whatever they want to charge him and the retail price still stays the same. That's the problem; those retailers who are not on regulations, for whatever reason, then they have no control over what the price is going to be to them. So that's an issue that should be explained to him.

MR. CHAIRMAN: Thank you, Mr. Conrad, we'll move on. Ms. Streatch.

MS. STREATCH: Thank you very much, Mr. Chairman. Thank you again, gentlemen, for coming in today and chatting with us about obviously a very serious situation. I certainly don't profess to be the expert, that's why we've got you folks here this morning.

I've got a few questions and they sort of bounce around the boards, so I'm sorry if I don't stay on stream with them all. I'm going to start off with one that is likely unique to me. I have a 50/50 split in my constituency; I represent 50 per cent HRM and 50 per cent Lunenburg County, 50 per cent urban and 50 per cent rural. Junior, you may be the only other one, with Digby being more of a central core and then the rural communities outlying. I don't hear from my Tantallon constituents about regulation. I guess that's because they don't worry if there's a gas station in Tantallon - there's one there and there's going to continue to be one there. There's one in Halifax, close by, and so their concerns are different than my New Ross and my Western Shore constituents' concerns. So I guess it's maybe those folks that I want to chat about this morning for a moment.

In the community of New Ross, where I live myself, we are about 25 kilometres in from Highway No. 103 and about 25 kilometres from Highway No. 101, so we're smack in the heart of the province. We're very fortunate to have Barry Russell and the Esso service station, and Barry does a great job for the community.

Different folks have said to me, you know it's not regulation, Judy, it's customer service. They said, we'll leave Bridgewater, we'll get $5 worth of gas if we're down there getting our groceries, and we'll come back home and we'll fill up at Barry's, or we'll go to Chester and go to the doctor and come back and get our gasoline at Barry's because we know that we have to support him to keep him going. So that's something that I think we find in a lot of our communities, even though we are a travelling public we do come back home and support the local guys and gals.

I guess I'm wondering, Graham, what's the flavour out there right now amongst your industry? I know that there are conflicting reports, I know that there are conflicting messages, as we would get conflicting messages as I indicated from my HRM and my Lunenburg County - what's the rationale or the strategy with customer service and keeping your clients and working with what they've got right now, recognizing that some things are out of their hands and some things are within their ability to change, what's the flavour right now within the industry as it pertains to customer service?

MR. GRAHAM CONRAD: Mr. Chairman, the Esso station you're referring to is a fairly new one?

MS. STREATCH: No, Barry's been there for ages.

MR. GRAHAM CONRAD: Okay, it's not the one I'm thinking of. Anyway, I can tell you that over the years, and especially during the year 2003, regulation, over the years the importance of customer service and the difficulties retailers face has definitely deteriorated, there's no question about it. With the advent of exclusive self-serve, you know that diminishes the opportunity to provide certain levels of service. I think in a way - it's certainly not my personal opinion, this is based on feedback I get from the various communities - I think that retailers have been so frustrated and have suffered so much financially since 2003 that customer service levels ,at one point in time a concept which would have been so high on the list of priorities, unfortunately, the baby went out with the bathwater sort of thing.

You just can't provide the kind of service you would like to provide if you're losing money, if you're frustrated every day you come to work, if you're constantly in a state of turmoil, and all of the other problems that go with running a business - hiring people, training people and all that sort of stuff.

I can tell you that same relationship has existed between oil companies and retailers for the past three years. The relationship between oil companies and retailers for the past three years has been so adversarial, you have to be in the industry to see it. I mean the reps that work for oil companies, and they're all wonderful people, there's no question about that, they're only doing the work that they have to do, but the reps have a job to do and a job to do is what they're going to do. There's just so much tension in the industry, there has been prior to regulation, so much tension and dissatisfaction - and Roy would probably be a better judge of this because he's still in the business, I haven't been in the business for years - but the relationship between oil companies and retailers has deteriorated enormously.

Now I think it's going to change as a result of all of these oil companies, other than Wilsons, coming back to the table again, signing new agreements, getting into new cross- leases, so I think the whole thing is going to turn around again and get back to the basics again of providing the kind of service that the consumer wants and the problem might sort itself out. Do you want to comment on it?

MR. PETTIGREW: Our particular oil company, we just had a meeting before I came here, and there were a couple of gentlemen from Montreal, as well as the local reps. Their position now is, regulation is here, let's move on. They're very happy - I don't know how happy they are - but they're happy to just move on and put it behind us and business as usual.

The ironic thing is that for the first time in I don't know how many years, the focus is customer service. For years and years we've gone to meetings and we've never heard of customer service - it's get as much volume as you can pump out there. All of

a sudden now our particular company has come back to customer service. So maybe it's a sign of the future.

MS. STREATCH: I guess, Mr. Chairman, we can regulate whatever we want to regulate; we can't regulate customer service, we can't regulate good service, we can't regulate reliability, et cetera.

My second question, you made a statement earlier that I just find astonishing and I guess I'm looking for a why - stations are opening, how is that happening?

MR. PETTIGREW: That's a good question. One particular station that opened that surprised me is the Wilsons in Wentworth. Here's a gentleman who says that regulation is the worst thing in the world and he can't make money at it but he opens a new station in Wentworth. It just bewildered me when I saw that Wilsons sign go up. Other than that - I know the one in Parrsboro, I know the gentleman who is trying to open it, and he thinks now that he can finally make a margin where before he could not.

MR. GRAHAM CONRAD: Five years ago or six years ago there were no XTR service stations in Nova Scotia, now there are 24, I believe, and a desire and negotiations are on the go, a desire to increase that number even more. As recently as yesterday when I spoke to XTR people, they have a new site in P.E.I. and they have three outlets that they are negotiating in Nova Scotia, they pay cross-leases to the sites that they have and, as I say, they are up to 24 now. So the way they do business, they're very lean and very mean - not mean but they're very lean, no question about it. (Laughter) Anyway, they're very efficient. That's probably one of the reasons why.

MR. CHAIRMAN: I wonder, if I could just cut in there for a moment, Mr. Conrad, if you could just clarify for Hansard what XTR is. Is it actually the company itself?

MR. GRAHAM CONRAD: I'm sorry, XTR, I believe the official name is XTR Energy. It's an oil company, an independently-owned oil company out of Ontario. Their claim to fame is that they are now, or will shortly be, the only national independently-owned oil company.

MR. CHAIRMAN: Thank you for that. Ms. Streatch, sorry to interrupt.

MS. STREATCH: No problem. I'm going to again bounce around, I had warned you that I was going to do that. My next question maybe goes to my own naïveté, I perhaps don't understand as well as some of my colleagues do, but why can't we just set our own prices in Nova Scotia? Aren't we self-sufficient in Canada when it comes to oil and gasoline? Alberta certainly is free-flowing these days. Why can't we be self-sufficient?

MR. GRAHAM CONRAD: Well, you're going to drag me into that issue of being naive, because I don't know if I could answer that question intelligently. I do know that crude oil is regarded as an international commodity, and it trades around the world at international prices, as does coffee, as does gold, as do a lot of other products. I don't understand, though, why, at the retail price level, it fluctuates as much as it does. It's so difficult to understand. Oftentimes it doesn't make any sense.

We haven't been receiving the explanation since regulation that we were receiving prior to regulation, why prices would fluctuate, whether it be weather, whether it be whatever, inventory levels, something happening in Saudi Arabia or the forecast of something. Coffee doesn't change that way, gold doesn't change that way. If you go to a jewellery store to buy some jewellery, whatever the price is today, chances are it's going to be the same price next month, and yet those commodities fluctuate every day. To answer that question intelligently you'd have to ask somebody from the oil industry. It's just that simple. We're on the retail end of it, not on the upstream end of it.

MS. STREATCH: Thanks for the honesty. I'll see if I can't track down somebody from Mobil and get a more clear idea. Mr. Chairman, do I have a few more minutes to keep going?

MR. CHAIRMAN: You have about three more minutes.

MS. STREATCH: Fabulous. The next question I have is another statement that you made earlier. You made the comment about someone opting for regulation. I guess I'm wondering why - not that it's a good thing or a bad thing - is there an option? Why is there an option to participate or not?

MR. GRAHAM CONRAD: Mr. Chairman, when the regulations were developed, I do believe the regulators tried to incorporate issues that affect all the stakeholders: retailers, oil companies, the public and others. There were retailers out there who would immediately benefit from regulation. There were the possibilities that retailers could negotiate a better deal now that the regulations were introduced. Then there was another possibility that, for whatever reason, retailers just prefer to leave things the way they are. The answer as I see it is just that these options were there to try to make it as democratic as possible, to give everybody an opportunity to do, in theory, what is in their best interests.

[10:00 a.m.]

As I also said, the procrastination from the oil companies during that four-month period when the retailers had to negotiate, it went right down to the wire. Oil companies did not negotiate with their retailers during that period of time when they tried to sort out the best deal. So what happened is that the first wave of retailers who signed on for

regulation were those where it was obvious that they just wanted it for the reasons that they wanted it. Then there was a tremendous amount of confusion out there as to whether or not cross-leases or other kinds of deals would still exist if they signed on for regulation.

That never did get resolved until a week before, or at the very end of October, when November 1^st is the deadline, Shell came forward and said, we will enter into - and Petro-Canada did, too - cross-leases, new agreements with retailers who opt for regulations. So at that point in time, those two oil companies had come forward and said, those retailers who are in that situation can still count on getting those cross-lease funds as well. So that had an impact, but then there are still - and to this day, as I say - retailers out there with Wilsons/Esso who refused to give cross-leases to anybody who has opted for regulations.

MR. CHAIRMAN: The time has expired. We'll get another opportunity.

Ms. Massey.

MS. JOAN MASSEY: Certainly we were provided with a lot of information on this topic, and as my honourable colleague opposite has said, it's quite a complicated issue and I'm not going to pretend I understand all of it either. It's a learning experience to come here and be able to take this information back to our constituents. I think, from what I'm seeing in the information that was provided, it's a good-news story here this morning. I believe from what I'm hearing in my community what the government set out to do through various, being pushed and nudged along the way by different parties and maybe some opposition in other places, but the fact is that the government went into this looking for stability, and that was the number one issue. I think, overall, from the information provided us, that has become something that is a reality.

I guess the question now is, in some spots where it isn't working quite so well, what are we going to do about that, especially where it's going to impact on tourism, it's going to impact on our seniors, it's going to impact on full-service stations? There's a lack of a lot of these resources now across the province for our seniors. There are not enough full-service stations around, I don't believe. We've pushed for that for a long time.

One of the bonuses that has come out of the whole thing, what I see in your presentation this morning, is the fact that, indeed, the regulations have managed even lower prices, which was not something that was promised at all by anyone, I don't believe. So I'm looking at that as a big bonus. I think the reductions have occurred faster, and the stability is greater stability than was there before. I think just allowing people to know that, yes, the price is going to go up or the price is going to go down on this date, people feel they're more in control of being able to plan on going to fill their tank up or

what have you. It just gives people a sense of power, I guess, not feeling so powerless as they have in the past.

I do still get a few e-mails, very few, since all this began from people concerned about the cost of gas. We would all like to see it go down and down. I just don't think it's really going to happen. If we're looking at where we're going to go now, and in fact the regulations are under review, then I think we're in a good place today, we can say now we can step back, look at what the regulations have provided, or haven't provided, and really try to improve things. When we're talking about Brier Island, Digby Neck - I think most of us have probably been down there, and it's a beautiful spot - that is an example of maybe something that is outside the norm. It's a beautiful place to be trapped in, let's put it that way. If you're there and you don't have a gas station, what are you going to do?

MR. THERIAULT: Stay with me. (Laughter)

MS. MASSEY: You don't want to force the community to go under. I think you mentioned that maybe that could be a different zone, it could be zoned differently. You talked about maybe we need to provide some tools to help stations that are struggling. Maybe the government could provide some tools, either educational or what have you, I don't know, to help them realize how regulation will help them.

I don't know if I have a question for you. I guess my question is, how do you see us moving forward and even making it better than what it is today? I do see this as a good-news presentation this morning.

MR. GRAHAM CONRAD: Several thoughts go through my mind as I'm listening to what you're saying. First of all, I think it's very significant that with regulation we now have an environment, we have a framework, an infrastructure whereby further improvements or more changes can be made in a managed fashion, which is good. I think we're at the point now where - I don't want to sound demeaning - perhaps we could be tweaking some of the deficiencies that exist right now. Full-serve is one of them. I do believe that the solution to the full-serve problem is just as simple as I've described. All you have to do is change the economics, and fix them, so that any retailer who wants to invest in providing that kind of service knows exactly what the economics would be like, no surprises, no getting the feet cut out from underneath you because of some pricing situation that happens down the road at an oil company site or something. That's a quick fix.

In terms of the Long Islands and places like that around the province, I think there's a study underway right now, in addition to us going on with Gardner Pinfold, looking at transportation costs, the costs that wholesalers incur to transport product. I believe there is a study on the go right now. The reason why the study is on the go is

because there was not enough information, there was no information gained from the Utility and Review Board hearings, from the oil companies. For an oil company to say it costs more money to ship the product to Long Island, or wherever the case may be, and that's what's ruining the economics, that information never came out at the hearing, so there's no way that could have been established until now, when this research that's taking place is completed.

It could very well be, by the time the regulators, the government finishes their study on transportation costs, that certain parts of the province may have to have additional costs for transportation built in to create that incentive for the oil company and to enable that retailer to get the margin that they need to be viable.

In a bigger sense, I guess it goes back to the discussion on customer service, I think the industry has to get over what we've been suffering through in the last three or four years in terms of the negativism and the lack of understanding and appreciation of each other's positions. Once all of the oil companies are on board with respect to the contracts that they offer retailers, that's going to take care of a lot of the negativism that's associated with that brand. Then as XTR or somebody else comes into the marketplace and says, we like this regulated market, we want to invest in this province, the situation, over time, is going to straighten itself out, because of the fact that we have the regulations.

MS. MASSEY: Your organization would be putting forward recommendations for changes in the regulations through the review process?

MR. GRAHAM CONRAD: Sure.

MS. MASSEY: I guess part of the problem is, as you've just said, I don't think there was a really good process of communicating the whole regulation of that industry at the very beginning. I know when I did have questions from people, I tried to reply with some attachments, some press releases, government press releases and some things we had sent out, but I don't think, really, from the very get-go, people understood what it was going to mean, and that it was all about stability and not lowering the prices. If we are lowering the prices, great, that's a bonus.

I think one of the parts that the government needs to look at when they're reviewing this is how regulating this industry is going to affect, positively, issues like tourism across the province. We've just seen a tourism operator that looks like they're going to shut down in Cape Breton, a ski resort. Numbers aren't getting better in this province, in fact if the government is going to continue to go along the route of saying we're going to double tourism by this year, I think it's unrealistic at this point. I think regulation, what they set out to do was look at stability. I think the tourism industry needs some stability, also. Maybe right now is not the time for a big, grandiose vision for

tourism, but I think part of the gas regulation, if people know that there's stability, it's going to have a positive effect on tourism.

Again, it's all connected. If you have a tourist who can't find a gas station where they need a gas station, can't find a rest stop where they need a rest stop, can't find full-service because maybe they have a disability, it does impact. We're not sitting here isolated. People go back and talk about these things in their own community, they talk about, if our tax dollars that we collect on this sale of gas are not going back into our road structures, our bridge structures, if they're not filling in the potholes and they're not fixing our secondary roads, I think that's where tourists really want to be. I don't think tourists really want to be travelling on the highways, there's nothing really to look at.

It can't be a discussion that's just, over here it's gas regulation, but how does it affect these other industries? If we're talking about rural Nova Scotia, the tourism industry is a huge component of that. We're talking about how we're going to keep our schools open, how are we going to keep the volunteer fire departments going. If we don't have gas stations, we don't have schools, these are the things that I'm hoping the government is going to look at, in the bigger picture.

MR. GRAHAM CONRAD: Mr. Chairman, just sort of a comment that I think puts everything in perspective. During the last three years on record, there has been a net reduction in the network in Nova Scotia of 17 per cent. They're primarily rural retail sites. In Prince Edward Island, there has been a net reduction of 6 per cent in the last three years on record. The average through-put in Prince Edward Island is almost 1 million litres less than the average through-put in Nova Scotia. To me, that tells me - and P.E.I., of course, has had regulation for 15 or 16 years now - that the industry is far more stable in P.E.I. than it has been in Nova Scotia for the last three years or so.

MS. MASSEY: It's just kind of odd, I saw in your presentation that Wilson Fuel was so adamantly against regulation, but yet they weren't in P.E.I. Maybe they're coming on board now. I'd just like to say, in wrapping up, thank you for your presentation. It was really informative for me, and it's always helpful to come in.

MR. CHAIRMAN: Ms. Raymond, for a couple of minutes.

MS. MICHELE RAYMOND: Will you come back to me afterwards?

MR. CHAIRMAN: I will be coming back to you.

MS. RAYMOND: Like everybody else, I have to say thank you very much for coming in to speak to us about this, because this is really - I think all of the conversation here tells us how essential and central it is to people in Nova Scotia at this point. There are so many places I would like to start, but I think one of the interesting things is that

even the letter from somebody in a very isolated area of the province, from the gentleman with the gas station down in Tiverton, tells us something about what it is like to lose a gas station. It's a very eloquent plea, I would say, in many ways for regulation to the degree that you seem to be showing us a decline in the rate at which we lose gas stations. Am I correct?

MR. GRAHAM CONRAD: Yes.

[10:15 a.m.]

MS. RAYMOND: Okay. That is, I think, one of the things that we were saying from the very beginning, that everybody looking at this is saying at this stage and at this time and place in Nova Scotia, when rural Nova Scotia is losing so much infrastructure, one of the elements of infrastructure which we do need to retain is in fact the gas station, the way of at least travelling to and from. We don't have - I speak as the Environment Critic at this point - the railway anymore, we don't have international transportation from the Yarmouth airport, you don't go back and forth to Customs out of Yarmouth, you don't take the train to Yarmouth and the tourists don't take the train to Yarmouth. So at this point if you want to travel, you travel by road.

It's like the old "Bert and I" joke out of Maine - I'm afraid we're going to reach a point that if we don't have gas stations where people will stop, they'll ask for directions and the answer will be, "You can't get there from here." That's what we cannot afford to have happen in Nova Scotia.

So I guess I have to finish up the time now, but I have several questions I'd like to ask you if you have a few minutes later. Thank you again.

MR. CHAIRMAN: Thank you, Ms. Raymond. We will have a few minutes for you after the round completes. Mr. Samson.

MR. SAMSON: Thank you, Mr. Chairman. I want to thank Mr. Conrad and Mr. Pettigrew for coming here today. Gentlemen, you're here representing the Retail Gasoline Dealers of Nova Scotia and that's fine, that's your purpose in being here and in the best interests of your organization. We're here as elected members representing Nova Scotians, so we look at a bit of a bigger picture than what you look at and at the end of the day that's who we answer to.

With all due respect, you've brought a presentation here today and you've used numbers that fit your argument. Next week, I can bring someone else in who will use the same numbers, different periods of time, and will debunk all of your arguments. So let's be realistic about that.

Let me start by giving you one example. You've looked at the last three years in P.E.I. for station closures. If we look further back in P.E.I. compared to Nova Scotia, per capita, they have seen just as many service stations close as we have here in Nova Scotia. You know that and Mr. Pinfold has shown that in his report presented to the government in the Fall of 2005. So let's be honest here - if we work with numbers, we can make them fit the argument we're trying to make.

Overall, regulation has not stopped rural depopulation in P.E.I. and it is not going to stop it here in Nova Scotia. That's going to be the crux of my argument here today, Mr. Chairman, that this committee, as an Economic Development Committee, should be sitting around trying to see how we can make rural Nova Scotia grow again. Gas regulation is not going to do that. You're trying to stop a bleeding by trying to have government trying to protect stations that won't survive because of the fact that people are leaving. That's the reality and it's unfortunate that we're not talking about that here today.

What you are seeing - and with all due respect, what my colleague Mr. Theriault has brought to you - is a plea from a gentleman on Brier Island who's telling you that under competition, he survived. The only time he's not surviving is under regulation, because now the government is dictating to him what he needs to sell his gas at. It was never an issue before, it wasn't an issue from 1917 forward, but it is today. There's only one message to read into that - regulation is causing this gentleman to stop selling gas in that community.

If we're here today to say, well, maybe he's unique, well, who else is unique? I can think of stations in Richmond County that are unique. I can think of stations north of Smokey in Victoria County, a very unique area of the province. Up in Amherst, different areas all along the shore - very unique. Where do we stop? Government is trying to regulate something they can't control.

We watched the price of a barrel of oil change by the minute on the stock market and we're here trying to guess at what changes there are going to be. You've said it has brought stability - I'll argue with you that it hasn't. We have only seen regulation for a little over six months - wait until we see it for a full year and look at what we had last year for price changes. It'll be almost the same because your prices have been changing here in Nova Scotia almost every two weeks and, with the interrupter clause, it has changed even more often. So the numbers will show that there's going to be little in the area of stability.

You've argued here that we should look at the price excluding taxes. My constituents can't look at that when they go to put gas in their vehicle - they have to pay the taxes. Their bottom line is, how much am I paying when I go inside, not what I'm paying excluding the taxes. That's what they need to look at and that's what we need to

look at. So comparing what it is in other jurisdictions, excluding taxes, doesn't work for my constituents because they're saying, here's what I'm paying and someone else over there is paying something different. That's the reality.

I want to take you to a few specific things that you've said. You know we disagree with this whole concept of gas regulation, we have from the start. In your presentation, you've indicated that the only people who have criticized gas regulations have been Roger Taylor, Dave Collins and myself. You failed to indicate Boudreau's Fuels, a small wholesaler in Richmond County, who almost had to cut off seven stations, rural independent stations because of this. You didn't indicate the owner of the Judique station in Inverness County who actually closed his station now. You didn't indicate the owner of the Whycocomagh station who closed his station, nor have you indicated the 70 per cent of Nova Scotians who, through our polling through an independent firm, showed were opposed to gas regulations. So with all due respect, sir, there is a lot more criticism of gas regulation than just the three people you have mentioned.

You've indicated, you've made the statement that because of gas regulation it has brought the price of gas in Nova Scotia down 37 cents per litre. Do you seriously believe that gas regulation and that an open, competitive market would not as well have seen a similar type of reduction? Are you saying here that gas regulation alone is what brought the price of gas down 37 cents a litre from the height we saw this summer?

MR. GRAHAM CONRAD: You've covered a lot of ground there. To answer the question, do I seriously believe that regulation brought the price down as far as it did? Is that the question you've asked?

MR. SAMSON: Well, that's the statement you made, so that's why I'm asking it. You said it twice, which is why I'm asking you. Do you actually believe that regulation alone is what did that?

MR. GRAHAM CONRAD: The formula that is used to regulate gasoline brought the price down to the numbers that I've shown you and . . .

MR. SAMSON: Are you saying a competitive market would not have allowed that?

MR. GRAHAM CONRAD: . . . I think I had earlier indicated that I have never seen, in my years of experience in this industry, an 8 cents a litre decline all in one fell swoop ever in my career. I've never seen the price of gasoline go down just before a long weekend. I gave the numbers that suggest that the total reductions in Halifax, compared to the Canada average, indicate that for whatever reason, Nova Scotia has come down more than did the Canada average.

Those numbers aren't - when you use the term "honest" in terms of any comments I've made or in terms of the materials I've presented, I'm not sure what you're driving at. You make reference to these stations that are closed - Whycocomagh is not closed, it never did close. It never closed, and these people that you're talking . . .

MR. SAMSON: Are you saying that he never threatened to close?

MR. GRAHAM CONRAD: Oh, now that's not what you said, you said he closed. Then the situation we talk about in Long Island or Whycocomagh, they're exactly the same situation. Neither of these retailers would opt for regulations, they never went on regulations.

MR. SAMSON: Now that's two different statements. When Mr. Theriault first brought that up you said, I don't know if he opted in or not. Now you're saying he opted out - do you know that?

MR. GRAHAM CONRAD: No, I don't.

MR. SAMSON: So you suspect that.

MR. GRAHAM CONRAD: I suspect from the discussion that - I know that in Whycocomagh he did not opt for regulations and the reason why he got caught in the dilemma that he got caught in, he had no control over his margin; therefore, he had no control over his cost of product and his cost of product went up far higher than the outlet down the road - same brand - who was on fixed margins.

MR. SAMSON: Now in Tiverton, regardless of whether he opted in or not, the gentleman tells you, and he is saying in the letter to the Premier, you desperately need to get out of the free marketplace. Under the free marketplace the man survived; he made ends meet. Since regulation he says he can't do that anymore. The same thing for the service station in Judique; they closed, they couldn't make it anymore under regulation. So that we know. The guy in Whycocomagh, he threatened, obviously you're saying that he hasn't done it for now.

I'm curious, is it your statement today that under regulation we will not see any significant amount of service stations closing in Nova Scotia? Is that a guarantee that regulation is bringing?

MR. GRAHAM CONRAD: Well, I can't guarantee anything, first of all, but I can tell you that the rate of closures has declined since regulation. I can also tell you in the same breath that there will no doubt continue to be closures for reasons other than regulation. The demands of running a business these days in this industry are becoming more and more challenging all the time.

I'd like to make reference to your challenge on the numbers from the Gardner Pinfold study versus the numbers that I've given you there with respect to closures in Nova Scotia in the last three years and closures in P.E.I. in the last three years. I mean you could take your scenario of 15 years, it all works out; if you went back 30 years, the numbers would be even further skewed.

The issue is that three years ago, something happened in Nova Scotia - only Nova Scotia. That's why the numbers that I've reported are the numbers that have closed and these retailers have indicated that because of the decline in margins, they've closed in the last three years, which was almost three times the closure rate of P.E.I. So the longer you spread the term, the more diluted the problem becomes, but if you want to look accurately at the problem, what happened three years ago in Nova Scotia that did not happen in Prince Edward Island?

MR. SAMSON: I can tell you, Mr. Chairman, for example, where I come from we started losing hundreds, if not thousands, of people on a regular basis - that's what started happening. In Richmond County - in Isle Madame, in Richmond County, I had eight service stations; today I have four. I had over a dozen small grocery stores, and today I have two or three. It's not just gas stations. People are leaving rural Nova Scotia. We can't change that, certainly not by doing regulation. Maybe we can change it by actually having economic growth in our rural communities, but not by forcing people to pay more per litre of gas to keep gas stations open when the people aren't there.

That's the reality that we're facing here, and the crisis that we're facing in our communities. Maybe it's not an issue in Dartmouth, but it's an issue where I come from. On my small island, Isle Madame, I've lost over 2,000 people since the early 1990s, a devastating blow. That's why those service stations are gone. It wasn't because they didn't have margins - the people were gone. Even though you guarantee margins, it couldn't sustain eight gas stations. That's not going to change. In rural Nova Scotia, when we lose people, businesses will close, and not just gas stations. Regulation will not protect it if, at the end of the day, you just don't have the volume to keep it going.

You've indicated that maybe under regulation, we should be paying more for self-service. I've never heard that as an issue under competition. I'm curious, is that part of your submission that you put forward for the gas regulation review?

MR. GRAHAM CONRAD: Mr. Chairman, I never made that statement.

MR. SAMSON: You never suggested maybe that consumers should have to pay more for self-service?

MR. GRAHAM CONRAD: I said full-service.

MR. SAMSON: For full-service. Have you submitted that as part of your submission to the gas regulation review, that the government should make people pay more if it's a full-service station?

MR. GRAHAM CONRAD: Not at this point in time. We will after this process is finished. That's one of the recommendations we plan to make.

MR. SAMSON: So that's something that just kind of came up today, is it?

MR. GRAHAM CONRAD: No.

MR. SAMSON: I'm curious - in New Brunswick, for example, they're paying 4 cents a litre less than here in Nova Scotia. Because of our regulated market, we're almost to the point now that on average New Brunswick is paying 6 cents less per litre than we are here in Nova Scotia. I'm wondering, what kind of impact has that had on stations in and around the New Brunswick border? How has regulation benefited them in light of what New Brunswick has done?

MR. PETTIGREW: I'm glad I get a chance to speak. First off, there's a couple of comments I'd like to make. As a service station owner, we don't just represent the people who vote for each individual, we represent all Nova Scotians and all the people we serve. Secondly, the disagreement, the part that you disagreed with from the start, is wrong. You know that and I know that. When the committee met, and we met with your committee, and we went to Parliament, it was 100 per cent vote.

You weren't against regulation from the start - I'm sorry. You have a letter from me, sir, and I'm still waiting for a reply. Your tax structure idea - yes, taxes are a problem between us and New Brunswick at this point, and we hope to address the government about that at a later date. It does affect our volume, but under the regulated system, we were pumping more gas for less money. If I sell you this cup for a nickel, or I sell you 10 for a nickel, I'm making the same amount of money. This year we are pumping less volume. I believe the loser here is probably the province, because we are seeing tax dollars going to New Brunswick, from our border at this time.

But at least we have a stable market. We know what we're going to make a litre on a daily basis. If we weren't regulated at this point, I could see us pumping gas at this point for less than 1 cent a litre, just to stay in competition with the New Brunswick border. There's no good in giving your gas away. You can't pay employees and give it away. As far as I'm concerned it's a good . . .

MR. CHAIRMAN: Mr. Samson, you have about a minute and a half left.

MR. SAMSON: Mr. Chairman, as I've said from the start, regulation will not stop rural depopulation. What it has meant is that Nova Scotia consumers have paid more for gas for longer periods of time than what would have been seen under a competitive system. Yes, we saw an 8 cent drop. Under competition, we would have seen four days of 2 cent drops. It would have worked out to the same thing. That's what we've seen before.

[10:30 a.m.]

At the end of the day, consumers are paying more. What I find most interesting is that all of a sudden the people who are for gas regulation are horrified that Nova Scotia Power wants a fuel adjustment mechanism. Mr. Dexter, who has championed gas regulation, in his column this week, expressed great concerns about what the fuel adjustment mechanism would do to consumers. Gas regulation is doing the same damn thing to consumers here today as what that will do to consumers if Nova Scotia Power gets it. That's the reality.

You can't be afraid of one regulated system and then say the consumer should be under another regulated system. It doesn't work. A fuel adjustment mechanism would do the same thing to consumers as what regulation is doing. Rural depopulation is happening, and that's what this committee should be trying to solve. Trying to get government to dictate what people are paying for gas will not stop closures. It happened in P.E.I., it's going to happen here. The longer we start turning a blind eye to what's happening in all of our rural communities, the longer we're going to continue to not only have a problem with gas stations but with everything else.

MR. CHAIRMAN: Time has expired.

Ms. Streatch.

MS. STREATCH: Mr. Chairman, I just wonder, would you like me to take your spot - to ask a few questions - or do you want me to just keep going?

MR. CHAIRMAN: No, I can ask them from here in the next round. If you wanted to continue where you were, please move forward.

MS. STREATCH: I'm happy to, no problem. I want to go back to a question I asked you last time, Graham, if I can. This idea of opting in or out, and you explained it to me and I understand what you said, but now my question that I want to follow up with is, if no one opts in, do we still have a regulated system in Nova Scotia? What if no one opts in, what happens?

MR. GRAHAM CONRAD: Then it would put an enormous amount of pressure on the regulators to say if the retailer, which is one part of the equation, doesn't want regulation, then is it in the best interests of the motoring public? Is it in the best interests of the oil company wholesalers? Those are the decisions the regulators would have to make. I would like to think that the needs of the retailers are first and foremost, but obviously that's not the case. The whole picture means that everybody's considerations have to be looked at and measured.

MS. STREATCH: You likely already identified this, but I'm just going to ask again to remind myself, who currently is not opting in? Is it one company over another? Is it the independents? Who is not opting in right now?

MR. GRAHAM CONRAD: Currently the retailers, for the most part - I don't have figures, but I can tell you that for the most part - the Esso and Wilsons sites, who have been advised that they will not get their cross-leases if they opt in; the majority of the retailers who are not opting in are in that category. I hoped to have a retailer with me this morning, Wayne Pace, who is a retailer, an Esso/Wilsons retailer, and he, like many other retailers who were unable to remain viable and yet were high-volume stations prior to regulation, has an arrangement with his bank where his mortgage payment is based on this cross-lease payment. His bank just, point blank, says, I don't care what's going on in your industry, I don't know about regulations, I don't care about regulations, all I know is that's the amount of money that you better be applying against your loan, or otherwise we foreclose. He's under the situation there where he just can't take a chance, because he has been told, you opt in, your cross-lease is gone.

MS. STREATCH: You lose your cross-lease. Did you indicate that was being resolved in the second round of contracts, or . . .

MR. GRAHAM CONRAD: I believe it has to resolve itself. What's happening now is that Wilsons is going to find itself in a position where they're not competitive. Once the contracts that they have right now with retailers expire, they're going to find themselves in a situation where other oil companies are going to be offering better deals. It suggests to me that Wilsons is going to have to change their philosophy long before the contracts expire. I really think that once this issue is resolved once and for all - after the Gardner Pinfold study - that a lot of these things are going to sort themselves out after that.

MS. STREATCH: Mr. Chairman, one other question. I want to touch on the issue of zones for a moment. Again, I'm going to draw a reference to the fact that a portion of my constituency, even though, yes, we do represent all Nova Scotians, but a portion of my constituency resides within Zone 1, the HRM, and the other portion of my constituency is Lunenburg County, so we're in Zone 2. I haven't heard of any challenges. As I indicated earlier, most of the folks in the community, if they do happen to come into

the metro area, they'll come home and they'll work with Barry in order to secure his business.

My question is, other jurisdictions across the country, other jurisdictions that are regulated, do they follow the same type of zone system? Was that the only option available? How does the zone system work to the benefit of the retailers and to the consumers?

MR. GRAHAM CONRAD: The province that I'm most familiar with is Prince Edward Island. The entire island is one zone. When we recommended regulations for Nova Scotia, our position was that Nova Scotia should be one zone. That's really the way it works. There's one price for Nova Scotia. But then you get into deliveries, transportation, and that's when you have to say, well, it doesn't make sense to deliver product - from Halifax to Hants may be okay, but from Halifax to Yarmouth it doesn't make sense. So for transportation purposes, the province was divided into zones. That's just a function of the cost of delivering product.

MS. STREATCH: Have there been any challenges with the retailers or with the sector regarding the zone structure?

MR. GRAHAM CONRAD: Not that I'm aware of.

MS. STREATCH: So even though you had requested one or had suggested one, the zone structure as it exists now is working for the retailers with the regulations we have in place?

MR. GRAHAM CONRAD: The survey we did back in November 2006, which included opinions from over 200 retailers - about 80 per cent of the responses said that the zones as they exist now are not having a negative effect on their business.

MS. STREATCH: Thank you.

MR. CHAIRMAN: I just have a couple of questions. In January/February, you outlined some things in your report. One was the Omnifacts Bristol survey of 78 per cent. We move a full year and there have been a variety of things reported, in percentages in favour, against, et cetera, and how they flip-flop, perhaps. But I see, almost a year later, we're fairly consistent at 79 per cent of the driving public is content. Is that the right word? I just want some clarity on what your report says here - to be stable, if that was the goal in regulation. They're happy with the regulation set in this province?

MR. GRAHAM CONRAD: In terms of the retailers? By far, the majority of the retailers are happy with the regulations, yes. That's in spite of the fact that there are still a lot of retailers out there who don't understand the implications and significance of

being on regulations or not. Again, I take you back to Mr. Samson's example of a retailer who got burnt badly because he wasn't on regulations, and so he blamed regulations for his being burnt. There are many retailers out there who I still think don't fully understand the pros and cons. The feedback we have is the vast majority of retailers are happy with regulations. I think we have learned enough in the six or seven months since regulations that there could be ways to solve some of the problems that still exist out there without any major changes to the regulations.

MR. CHAIRMAN: Maybe just one other. I want to pick up on something that Mr. Samson had brought up, and it was about the number of people leaving, going West, maybe looking for employment or whatever, Ontario, Alberta, wherever those destinations may be. I know in the 1980s, there was a big number of people, also, who left this province, going West. I was one of them in the early 1980s. Is there any data, comparison - you know, what did that have to do with the price of fuel? We talked about stations closing because people are leaving Isle Madame, and the people weren't there to support that, and other things, grocery stores, et cetera. Looking back, is there some history that says this is repetitious, very familiar to that point, 25 years ago, when a similar thing happened? There was a boom in Alberta. As we're all aware, many people did leave this province going there - some are still there, but a lot ended up coming back to Nova Scotia.

MR. GRAHAM CONRAD: Mr. Chairman, I don't think the price of gasoline, certainly retailer margins, would have been a driving force to cause people to leave rural Nova Scotia - I just don't think so. I think employment opportunities, education - I know that 25 years ago, as you indicate, the industry was such that full-service mechanical repairs so to speak - that's all the industry had. Every site, at one point in time, by law, had to have service bays in Nova Scotia. That was back in the days when it was regulated. The requirement to have service bays meant that you had to have a technician, a mechanic working for you. When all of that changed, then the opportunities for service and repair business within a service station began to deteriorate. Again, employment opportunities were lost.

Again, going back to education, those same technicians, mechanics if you want to call them - that would be in rural Nova Scotia - would have to come to Port Hawkesbury or Halifax or Yarmouth to get their trades training. There is information to suggest that bringing people away from their community for extended periods of time into urban markets where there's a huge demand for people with skills, the migration from rural Nova Scotia to urban Nova Scotia was affected by the fact that they had to go to urban Nova Scotia to get their training. That is all part of it. The price of gasoline, I don't think, would have been measurable in terms of having an effect on people leaving rural Nova Scotia.

MR. CHAIRMAN: Thank you for that answer and that opinion. Mr. Pettigrew.

MR. PETTIGREW: On a lighter note, my daughter went to Alberta and came back with a husband and three children, so we're doing our part to try to get the population back into Nova Scotia. (Laughter)

MR. CHAIRMAN: Thank you for that. We have a few minutes left. We'll go to each caucus again, maybe just for a couple of minutes.

Ms. Raymond, if you'd like to start off, maybe for three or four minutes, and then we'll just go around. Then we'll give the guests an opportunity for some closing remarks.

MS. RAYMOND: Once again, thank you. I think one of the things that comes out of this is obviously those who like to gamble do have the option of opting out of regulations or going to the casinos, as the case may be. There are an awful lot of us who don't enjoy that kind of gambling. I know personally that's a feeling shared by some of the retail gas dealers, who don't enjoy seeing gas in the ground, which the next morning is worth much less than they paid for it. I think that so far this has shown the difference between gambling every two weeks or gambling every morning, and obviously that does do quite a bit for the stability of the labour force, for those who are employed in stations.

At this point, as I was saying, though, I think it's fair to say we do need transportation in and out of the rural areas. We've been seeing, and I would agree with my colleague across, a real hemorrhage of the rural population, and I don't think anybody would suggest that the help of gas stations is going to bandage that wound, but at least we don't need to keep twisting the knife by ensuring that the gas stations do leave.

What I am wondering about, though, is there's a lot of new refining capacity proposed for the province. Does that have any kind of a relationship whatsoever with what's going on here? Do you have any sense as to whether that new refining capacity is liable to come on stream? I'm interested because we have had the opportunity at various times to look at gasoline and oil as an element of provincial interest, provincial infrastructure, as well.

MR. GRAHAM CONRAD: Again, for the most part, the focus of our attention is at the retail level. Having said that, from what I read and from what I understand, the level of competition at the refining level is not as good, not as high as it should be. From what I understand, the oil companies, wholesalers - not major oil companies but independent oil companies - are dissatisfied in many cases with the relationship they have with their source of supply, their refinery. (Interruption) Right.

[10:45 a.m.]

I had the opportunity to present to the Canadian Independent Petroleum Marketers Association last year at their annual meeting. My presentation was based on

how regulations evolved in Nova Scotia, what happened along the way to get us to the point where the government would determine that regulations were beneficial. The feedback that I got and the welcome that I got was very favourable and I only did that because, to be honest with you, I had been asked by our local member of that association, Wilsons Fuel.

Anyway, I have a meeting at the end of this week with that same group of people. The message I got from them last year, and even as recently as last week, is that in the Province of Ontario where the next annual meeting is of the Canadian Independent Petroleum Marketers Association, they are still looking at that issue of regulations in other provinces because the oil companies are running out of retailers to sell their product to. That all backs up to the refining level.

MS. RAYMOND: Another quick question?

MR. CHAIRMAN: You may have one more quick question.

MS. RAYMOND: A very quick question, and I don't know whether these two things add up but speaking again a little bit from the perspective of the environment, you've indicated that there are fewer litres of gasoline being pumped recently, is that correct? Did I hear you say that there is less gasoline being pumped in the last year or so but fewer closures? You didn't say that, I'm sorry, okay.

MR. GRAHAM CONRAD: No.

MS. RAYMOND: Has the figure changed at all?

MR. GRAHAM CONRAD: I don't have access to that information, to be honest with you, but to the best of my knowledge, the volume - the industry volume in Nova Scotia?

MS. RAYMOND: At the retail level.

MR. GRAHAM CONRAD: At the retail level, I don't think it has changed. It might be up a little bit, it hasn't changed very much, 1.2 billion litres a year, I believe is the number - 1.2 billion-something litres a year.

MS. RAYMOND: Okay, so that has, in fact, remained stable, despite the slowdown and closures.

MR. GRAHAM CONRAD: Correct.

MS. RAYMOND: I'll ask a very quick question. Do you have any recommendations about defining sort of special zones - zones of isolation which would permit margins to be greater in areas where people have no choice? Do you have any sort of distance recommendations or otherwise?

MR. GRAHAM CONRAD: I think my recommendations - they've been touched on already - would make sure that we fully understand the costs of transporting product to these rural locations, to make sure that the wholesalers are getting a fair and reasonable return. My recommendation would be that the cost or the margin that a retailer gets on a full-service operation should be increased, to try to persuade or as an incentive for retailers to invest in providing full-service. I think that would help.

MR. CHAIRMAN: Thank you, Ms. Raymond, your time has expired. Mr. Theriault.

MR. THERIAULT: Thank you, Mr. Chairman. I have a quick one for you, Graham, and I've been asked this question a lot and hopefully we can get an answer here today. If not, maybe we can find out somehow.

We sell four types of fuel at the pumps: we have our premium gas, we have our middle premium gas, we have our regular gas and then we have our diesel fuel. Well, diesel fuel always was the cheapest fuel because it's less refined and the more up you go to your premium, it's more refined so a bigger price. So why is diesel fuel a higher price at the pumps than the premium fuel that costs more to make; and add to that, why is there less tax on diesel fuel than there is on premium gas?

MR. PETTIGREW: You'd have to ask the government why there's less tax.

MR. THERIAULT: Well, that's a good thing but why is it more - why does that cheap fuel cost more at the pump?

MR. PETTIGREW: You'd have to ask an oil company. We get a price for diesel when we get our diesel and you . . .

MR. THERIAULT: You fellows don't know this?

MR. PETTIGREW: No, we have no way of knowing that. We get asked that question every day, especially from truckers, and we have no answer.

MR. THERIAULT: How could we find out?

MR. PETTIGREW: Years ago, our diesel - you know if we go prior to 1990, our diesel was always 10 or 12 cents cheaper than gas and then, all of a sudden, it slowly

crept up and there have been periods. The only explanation I can put on it is what the market will bear. I guess that's the only answer I can give you. You'll have to ask somebody from the oil companies, maybe there's somebody here who can answer that question. There are some oil experts sitting on the side, maybe some of them can answer that question because I can't.

MR. THERIAULT: Thank you.

MR CHAIRMAN; Thank you, Mr. Theriault. There are 10 minutes left, and I'll offer Mr. Conrad and Mr. Pettigrew an opportunity for some closing remarks.

MR. GRAHAM CONRAD: Thank you, Mr. Chairman. I guess my closing remarks would be that I think, and I hope you agree, that the information we provided in a very honest fashion and which is very easy to substantiate, points to or speaks to the fact that regulations, for the most part, are working.

I think there are opportunities within the regulations as they currently exist, to make further improvements. The only way that can happen is if the level of co-operation between oil companies and retailers continues to improve, and I do believe that's going to happen. Once the Gardner Pinfold study is completed, my speculation is that it's going to speak in favour of retaining regulations as they exist. It could perhaps change the period within which prices are set, that sort of thing, but once that's behind us, then I see sort of a return to a more positive climate in this industry, where people get into the industry for good reasons, invest in the industry and were positive about providing levels of service. Perhaps most important, because it does speak to this rate of closure issue in P.E.I. versus Nova Scotia again, perhaps most important is that it will finally enable an opportunity for successor planning in Nova Scotia that currently doesn't exist but exists in Prince Edward Island.

Many of the numbers in Prince Edward Island of closures are retailers who have retired. They have sold their business, they've sold it to Tim Hortons, they've sold it to Robin's Donuts, they have gotten themselves out of the business in a very positive financial manner. In Nova Scotia, there's a huge number of retailers in this business today because they can't get out. I do believe that will change once we get some sort of stability and some sort of positive attitudes towards investment back into this industry.

We have our fingers crossed and are hopeful that when the study is done, it will affirm what we've said here today.

MR. CHAIRMAN: Thank you, Mr. Conrad. Mr. Pettigrew, any closing remarks?

MR. PETTIGREW: No, I just want to thank you for the opportunity to be here today. Regulation for me has been a positive thing, I'm pretty happy with the way it has

been going. There are some kinks, there are some things that we need to address, maybe some of those zones and whatnot, but overall I do believe that it's the right direction to take.

I know that it has made life a little easier for me. It's not a perfect world by any means, but at least it's sustainable and we do have some stability in our pricing. Thanks.

MR. CHAIRMAN: Thanks to both of you, on behalf of the committee, for appearing today and taking some time to answer our questions. I, for one, do look forward to the Gardner Pinfold study coming out, to see where we go from here, so again, thanks very much.

Just one other piece of business for the committee. I believe our next date for a meeting is March 6^th. I wonder if we could get from each caucus - there is a list that we've submitted in the past. We're going to attempt to have a subcommittee meeting, I believe, maybe just after the next meeting on March 6^th, to review the list. The clerk is having some difficulty getting the witnesses that we've brought forward in the past confirmed, so if we can add to that list or any other folks you'd like to bring forward, please do so in the near future. I believe Darlene will send an e-mail out, as well, just as a reminder.

Thanks very much, and if there's no further business, we stand adjourned.

[The committee adjourned at 10:55 a.m.]