Expect no big price changes this week
Contentious gasoline season starts

Media release

Conception Bay South, NL, March 25, 2008 – “Don’t expect to see any large changes to petroleum pricing this week in spite of the drop in crude oil pricing”, that’s from George Murphy of the Consumer Group for Fair Gas Prices.

“Five out of seven days show a slight decrease of 2/10ths of a cent for heating and stove oils, while gasoline shows only a 2/10ths of a cent increase in pricing over twelve days. Remember that heating-stove oils faced interruption last week and that’s why those numbers are for five days of data.

“While oil traded lower on some disturbing economic news, oil’s related commodities still traded at near record levels. Pricing for heating, stove oils and gasoline all remained high with only slight fluctuations through the last week. Refiner capacity dropped back to a low of below 84% which is a sign that refiners have turned attention to shutdowns for maintenance and the switch to gasoline. Capacity has been measured as being very low in spite of the consumer need for refined product this last winter and it’s almost as if there was a ‘purpose’ to keeping refining ability low.

“It appears that heating-stove oils are starting to lose their focus in the markets as numbers started dropping on the New York Mercantile Exchange this week but, unfortunately, I don’t think it has been enough to start to warrant a significant drop in distillates. More substantive drops in heating-stove oils should be realized over the next couple of weeks. If I were a heating-stove oil user, I would rein back on my purchases and just purchase what is absolutely necessary to get by. What is more important in this equation is that we now have to see a substantive drop back in heating-stove oil numbers over the next few months in order to avoid problems like we continue to see today; traders taking advantage of the fact that they were trading on a necessity and not on gasoline which can be less so.

“Next year, government should develop home retrofit programs as well as offer assistance to consumers who may need the help in switching to different heating sources. Conversion to electricity may be more practical and affordable for some in the long term if heating-stove oils continue to be over-priced to consumers.

“Numbers for gasoline are starting to gain more focus in the markets as of the start of this week and it is a sure sign that traders and investors are losing interest in heating-stove oils as a place to make a buck. They’ve hit a brick wall called ‘spring’. All eyes will be on gasoline as numbers for that fuel are already trading very high for this time of year. If people are a little more conservative in their purchases, they may just be able to help keep a handle on pricing of gasoline for the summer in spite of traders actions. Otherwise, we may see a scenario like we just left with heating oil in the dying weeks of winter. A boost in refiner capacity along with a building of gasoline inventories ahead of the summer driving season may be the consumers only hope.”

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For more information, contact;

George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices