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ST. JOHN’S, Nfld. — The Province of Newfoundland has introduced a bill to regulate fuel prices that includes fines of up to $5,000 for retailers or wholesalers who ignore the government-set cap.

“We have seen substantial and frequent fluctuations in price,” says Energy Minister Lloyd Matthews. “This has resulted in a lack of confidence in the way fuel is priced.”

A new commissioner will soon be named to oversee the fuel industry and the government expects to get the regulations in place by the third week of May. This makes good on a promise made by the province’s Premier Roger Grimes before taking over his new post.

Despite the confidence in the new system, Newfoundland Energy Minister Lloyd Matthews admits the laws won’t necessarily guarantee lower diesel prices.

The purpose of the law, which mirrors a system in place in P.E.I., is to stabilize prices, not lower them, Matthews insists. Newfoundland regularly sees pump prizes higher than the national average. Prices in St. John’s are often higher than those in any other major Canadian city.

“It looks like it will get to the crux of the problem,” says Dennis O’Keefe, a city councillor and head of the Consumer Group for Fair Gas Prices. “Volatility will be taken out of the prices, consumers will be treated fairly, and prices will be justified.”

Ron Harper, Canadian Petroleum Products Institute vice-president for Atlantic Canada, says the industry group wouldn’t comment on the bill until it passed final reading, expected today.

Under the new bill, the commissioner of petroleum pricing will, each month, review prices for gasoline, diesel and propane in Newfoundland and compare them with benchmarks, such as the New York Harbour price for fuels. They will then adjust the province’s price caps accordingly for the next month.

Newfoundland and Labrador will be split into five zones, in order to respond to the market forces in each region.

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