The Nova Scotia government has decided to regulate gas and diesel fuel prices, starting July 1.

The Conservatives announced the plan Wednesday, saying it will ensure gas prices remain constant for two weeks before they can go up.

Gas prices in Nova Scotia have hit $1.20 a litre. (CBC)
Gas prices in Nova Scotia have hit $1.20 a litre. (CBC)

Premier Rodney MacDonald said regulation means price stability, not lower prices.

"I believe that the population in general wants to have stability. I've said from Day 1 that this does not mean lower prices, but we will do everything we can to keep those prices as close to what they are today," he said.

The regulation plan, based on the Prince Edward Island model, calls for consumers to be given a warning about price increases.

But in the Nova Scotia version, if international fuel prices spike up or down significantly, oil companies can contact the province and indicate they need to interrupt the two-week cycle to change the price.

Richard Hurlburt, minister of Service Nova Scotia and municipal relations, did not say what he meant by "significantly."

"We'll be looking at the market place in New York. We also want to make sure the retailers are involved in this, and that's why my department will be going out and doing some consultation before July 1," Hurlburt said.

His department will be responsible for setting gas prices until the Nova Scotia Utility and Review Board takes over. The board will hold public hearings later this fall.

The regulatory regime will be reviewed annually.

The New Democrats have been calling for a regulated market for years.

"Nova Scotians understand that gas regulation will bring them price stability and will mean that there's somebody there on behalf of consumers who are actually arguing on their behalf," said NDP Leader Darrell Dexter.

The Liberals, however, say price control will not result in lower prices at the pumps, and have offered their own solution.

Liberal Leader Francis MacKenzie accuses the Conservatives of choosing the July 1 implementation date so they can call a quick election before consumers find out if the regulation plan works.

But the premier said Nova Scotia had to keep up with its neighbours.

"We would be the only province east of Ontario without regulations, and that was part of our decision, and that played a critical role in that," MacDonald said.