Gasoline prices to drop
Drop in refiner capacity makes consumers pay
Paradise, NL, June 19, 2007- Gasoline will come a little cheaper for consumers in Newfoundland and Labrador this week as prices are forecast to drop by a rough 3.3 cents a litre with 13 days out of 14 to report from, that’s according to George Murphy of the Consumer Group for Fair Gas Prices. Heating and stove oils are showing an increase of close to 6/10ths of a cent over the same time period.
“A look at the numbers from last weeks inventory data shows that Big Oil is making consumers pay for their past folly. We’ve seen Big Oil pay out big money to shareholders rather than make the strategic investments in refineries maintenance. Every time we see a refinery outage, we see the fruits of that. If refiner capacity drops against consumer demand, they still win,” said Murphy.
“Right now, Big Oil is heavily dependent upon foreign imports of refined product. That will be a strategic mistake to the consumer if demand picks up in other centres where this refined product is coming from. If the markets lose these imports to the North American market, we could see some sharp rises in pricing to the consumer. Because they’re not refining enough to keep up with demand and relying heavily on imports, we’ve effectively seen the creation of a ‘house of cards’ on the markets that the consumer could end up paying for in the end.
“Refinery capacity dropped in an Energy Information Administration report from last week. Numbers last week showed that capacity dropped in the gasoline demand period to fall to 89.2 per cent. While the same report showed a very modest growth in gasoline inventory, the numbers remained very bullish to traders. Numbers for the rest of the regulation period started to trade up again erasing some of last weeks predicted five cent drop at the pumps that should have happened.
“What is odd with the increase on heating and stove oils is that demand for distillates has increased over the same period last year. I’m still worried that there is going to be a sustained increase in heating and stove oils this winter if Big Oil doesn’t address refining problems. We’re still not seeing big increases in inventories of that fuel group, nor are we seeing drops in the cost price of those fuels. Spots are a rough two cents over what they were for the same timeframe last year.”
“People should be concerned that numbers for heating and stove oils aren’t backing down the way they normally would. This is the time of year that we’ve seen those figures back down but they aren’t. If this keeps up and nothing changes, we’ll be back into relief programs for those who can’t afford to pay for heat again and governments will be forced to act in response to Big Oil’s folly. We’re getting too dependent upon foreign imports to catch us when the markets are failing us.”
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