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Wednesday, June 25, 2008

Can this be true?
Gasoline and heating prices may drop next week?
Yes, you may be shocked to hear that...
Numbers from the New York Mercantile Exchange today are showing that gasoline, heating oil and stove oil prices may, indeed show a small decrease next week in Newfoundland and Labrador as markets react to the surprise build in overall inventories of crude and distillate supplies.
So far this week, gasoline had been showing about two cents a litre down and heating-stove oils to be down about three cents a litre. We still have another couple of days to go before the next price setting and the numbers I have still don't show for interruption but, hey, I think I'd be holding off as much as possible before I call in the heating oil truck...
Crude oil showed a modest, but important 800 thousand barrel gain against an expected 1.1 million barrel draw against inventory. Guess that's what you get in return for driving up prices in the first place; enforced conservation that's beginning to show itself!
Securities and Exchange Commission
A file is now opened at the US Securites and exchange Commission based on a letter of complaint I sent in dealing with market trading on June 6th that saw oil shoot up by that $10.76 US. We'll let you know what, if anything, comes from that. Ironic as it was, there were a few important resignations from energy trading firms in the immediate days prior to the drive-up in oil prices that prompted me to drop the SEC a note on the matter.
I'll be in touch!

Tuesday, June 17, 2008

No dodging the bullet this week...
Gasoline prices to take a swipe at consumers this week

Media release

Conception Bay South, NL, June 17, 2008 – Consumers in the province will be taking another hit in the pocketbook this week as prices for gasoline are expected to take a 5.5 cent a litre increase on Thursday, that’s from George Murphy, group researcher and a member of the Consumer Group for Fair Gas Prices.

What will consumers see?
“Twelve days of data out of a possible fourteen needed show that prices will jump this week by 5.5 cents per litre at the pumps. It’s not going to be any significant difference, the other two days. The numbers will be close to what we have. While we didn’t get it on the chin last week, we know we’re going to get it this week and this one will hurt. I have a number for heating and stove oils but, I’m not that trusting in the number until I see what the PUB will do this week. I’m showing an upwards move but I want to see if there’s any redress back to what I traditionally had before the numbers went out of whack last week. I never changed my system of measure for the last ten years yet, the numbers went way out of the traditional for the past summers’ measurement so, I don’t want to make a prediction until I see what the PUB moves the figures by. I will tell you though, that the heating and stove oil numbers show ‘up’. Is there a conspiracy against what I do? I don’t know. Someone else will have to answer that,” said Murphy.

Marine Atlantic increases rates
We told you all about a month ago that Marine Atlantic would soon have to adjust rates simply because of the move in distillates and oil pricing but, a conversation I had with Marine Atlantic staff some time ago tells me that the increases may not be necessary if the company does one of two things; namely ask Ottawa to absorb the increases outside of it’s budget or do the environmentally positive thing and slow down the boat by a knot or two. While Ottawa may not do the right thing, the possibility that slowing down the crossing on the Gulf by a knot or two would save untold tons of fuel that is leading to the fuel surcharges being added to the price of a ticket. The sources from Marine Atlantic tell me that slowing down the boat just a little may be able to help the company prevent passing on the hike to the price of the crossing. I’m told that, if they slow the ferry crossing by a knot to conserve fuel, it would add an extra fifteen minutes to the Gulf passage. Can this be true? What has Marine Atlantic done in regards to fuel conservation measures? It also begs the question, is the provincial government getting ready to hit the taxpayer with the same thing here for ferry services?

Inventories take a beating
The news out of the Energy Information Administration last week may have been a little bullish in the extreme but the markets still traded on a downturn in crude inventories never-the-less. “Here we are with something in the order of nine million more barrels of gasoline in the inventory but we see a draw-down in crude oils because of ‘anticipated’ demand. Here we are looking at a drop in consumer demand for gasoline by 1.3 per cent but we still see active trading on anticipated heavy consumer demand. I simply don’t get how these guys do it and the markets get away with it. It’s all bad news in spite of all the good news out there.”


For more information, contact;

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

P.S I'll update the numbers on a daily basis as the info becomes available but, i don't anticipate much change in them.

Friday, June 13, 2008

Big win for consumers
Competition Bureau hits a home run

Media release

Conception Bay South, NL, June 13, 2008 – Some oil companies are going to have to “work harder” to gain back the consumers trust after the federal Competition Bureau pressed charges of price fixing and collusion against several Quebec companies yesterday.

Three companies have already pleaded no contest and face up to two million dollars in fines for their folly and one of those companies also has operations here in Newfoundland and Labrador. Ultramar Limited was fined close to 1.9 million in their role in the scheme.
The Bureau is also alleging that other retailers operating under the Shell, Esso, Irving Oil and Petro-Canada picked up the phone and called each other to agree on what price to set.

“Consumers in this country have believed that companies charged the same price because they were afraid of giving any market advantage to the other guy. Now the Bureau has found out that this is not the case. In reality, what they found out was that, at least some of the companies literally made a fortune in spite of ensuring we were ‘getting good value’ for our dollar. Now they have to go to work and try to gain the trust back from us,” said George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“It’s just another reason why we have gas regulation in this province. There’s a lack of trust among oil companies and the lack of competition before regulation was quick to point that out. Fact is, is that oil companies here and elsewhere purchase gasoline and other oil products on different days and the price is different between those companies for that very reason, yet the price didn’t change between companies here. It begs to question if companies here may also be under the scrutiny of the Competition Bureau. Before regulation came in, there was no control to prevent such a thing from happening here. It would not surprise me in the least to learn that the Bureau had companies here under investigation because they failed to drop the price when the markets showed a drop in pricing. It has to be asked of the oil companies here, knowing that there is no regulation of the minimum to be charged here, why they don’t compete on that basis for market share.

“The Competition Act and the Bureau both need to get a little more work. Laws preventing the sharing of supply have to be revisited and such things as ‘reciprocal sales agreements’ and market rationalization of the oil refining industry need to be examined. Companies should never be allowed to share from the one source of supply that happens in some areas of the country, particularly in less populated areas. It is, I believe that simple ‘reciprocal sales’ arrangement that has ‘tempted’ oil companies to charge the same price in the first place. If Ultramar wants to sell here, they should be shipping in their own product from the Montreal refinery instead of buying stock off their competition like Irving or North Atlantic.

“Lead us not into temptation.

“The Competition Bureau and Liberal M.P Dan McTeague both need to be congratulated today for the hard work both parties have put in over the face of this investigation and for the changes in the Competition Act that are being lobbied hard for. What is missing here is restitution back for consumers and a means of levying heavier fines in the wake of the money that these companies garnered at the consumer expense. It’s going to be a long road back for some of these companies to earn consumer trust. These charges show that consumers didn't get value for their money.”


For more information, contact;

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

Wednesday, June 11, 2008

Err on the side of caution…
Interruption possible to most fuel products

Media release

Conception Bay South, NL, June 11, 2008- Consumers in Newfoundland and Labrador are starting to get used to the idea that pump prices are changing on a weekly basis almost every Wednesday now, and they may be right.

The numbers are close to those required for the use of the interruption formula so, the Consumer Group for Fair Gas Prices is warning of a possible increase at the pumps tonight as they believe that the criteria has been met for the use of the interruption formula to bump up pump prices by a possible five cents a litre.

“Six days out of seven needed are showing a move upwards by 4.4 cents per litre plus taxes and that works out to a plug nickel at the gas pumps but the problem here is that we simply just don’t have that seventh day of data needed to nail this one down,” said George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Heating and stove oils do not show the need for any price adjustments this week although it would not surprise me that they would go up in spite of my numbers. Here’s still a days piece of data that is missing and the numbers are close there.

Home retrofit program on the way
According to Mr. Tom Marshall on an Open Line show on Monday night, government is working on getting a home retrofit program put in place this year in the face of higher energy costs.

”While this might be seen as a good thing, it’s my belief that such a retrofit program should entail government help for those who want financial help in converting their heating systems from oil-based sources back to electricity. While electricity may be also based on demand, government has the ability through legislation, to prevent any spikes in electricity charges that may be passed on through Newfoundland and Labrador Hydro and that’s the beauty about owning the corporation. It belongs to the taxpayer of the province and we can call the shot on what costs that Hydro can absorb rather than pass down to the consumer.

Traders’ emphasis on distillates could mean more trouble
Heating and stove oil users can now be warned that, according to one news story from the markets this week, that special emphasis is now being placed on the distillate group of fuels as diesel and jet fuels have now become more predominantly used over gasoline worldwide. That means that heavier investment in diesel will be likely and that should be enough to support higher prices for any distillates for the foreseeable future. “There is a steady demand for distillates as both a transportation fuel and a heating source in the northeast of the continent and most of Europe and that means that consumers are more susceptible to higher price swings. This week alone, distillate fuels traded upwards by eight per cent and that’s for July delivery,” said Murphy.

New refinery on the way - but not for Newfoundland and Labrador
If you had your way, would you allow Canadian crude oil to go south of the border to be refined in South Dakota? Apparently, someone has…
Voters in Elk Point, South Dakota have given approval to rezoning for the construction of a refinery for Hyperion Resources that will, according to the Associated Press new story “process thick Canadian crude oil” at a rate of 400,000 barrels per day. Construction of the refinery is set to begin in 2010 and last for four years, bringing with it 1800 permanent jobs and 4800 jobs during construction.

“Why is it that we have to allow our crude to go south of the border for processing? What’s the matter with this country, that we can’t process our products here and ship the excess to customers in the United States if they want the product? Is it that easy to construct a refinery there instead of here? The Canadian government needs to do more for the consumer in this country like support the processing of our own resources in this country rather than help support the US economy. The Newfoundland and Labrador Government also needs to ensure that none of our offshore resources leaves our waters without secondary processing."


For more information, contact;

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

Monday, June 09, 2008

Note to readers:
This a formal letter to the United States Securities and exchange Commission asking the Commission to look into possible wrong-doings during last weeks $11.00 run-up in the price os crude oil. Remember that oil also traded up by $5 the day previously...

United States Securities and Exchange Commission
Division of Enforcement

Dear sir or Madam;

I am writing to you today to formally ask you to look into the latest market trading days as I believe that there may have been some wrongdoing on the investment front as it pertains to oil-related trading.

During the past few weeks, consumers in the United States and other jurisdictions including Canada, have all been led to believe that oil is trading on a fair and equitable basis and trading is based on the actualities that occur day to day.

While trading may occur on a speculative note, the actions of the markets the past few months, in particularly the past few days of trading, far excess what the market is actually worth and what the actual cost of oil should be. I believe that there may have been an attempt to reap huge gains from oil trading in the last few days, particularly on June 05, 2008 and June 06, 2008 inclusive.

I am asking that the Securities and Exchange Commission, on behalf of all consumers of petroleum products, investigate the following items for your consideration, namely;

1) Was there a case of insider trading before the release of pertinent market information that was used by traders to bargain on the speculative news events of the day, namely a prediction of $150 per barrel oil that was made by analysts at Morgan Stanley?

2) Was there any collusion between traders and investment firms that resulted in a $10.75 per barrel increase in crude oil and related commodity prices?

3) While the markets traded on the basis of a said inventory gain on the Wednesday previous to gasoline and distillate inventories, did traders and investment firms manufacture news items that would have led to a high level of speculative increases to oil and its related commodity pricing?

While trading may occur on a speculative nature, it is highly unusual for markets to trade on news that is already considered to be an “ongoing issue” in terms of newsworthy stories that may affect them. On Thursday and Friday, the markets already were trading on an imminent attack by Israel upon Iranian nuclear facilities. If, in fact, war was to break out in the Middle East as some fear, then why is it that the markets traded downwards on January 17, 1991 at the start of the last Persian Gulf War? Oil, in fact, traded down that day by $10.56 U.S a barrel in spite of attacks against Israel and disruptions in oil exports from Iraq.

As regards to the “news” from the research paper by analysts at Morgan Stanley, they are basing their figures on a presumption of no drop in demand where, in fact, the United States Energy Information Administration has found a 1.4% drop in consumer demand, contrary to the Morgan Stanley forecast.

I am asking the Commission to formally investigate the three above points on behalf of consumers in North America and I look forward to your response.

With best regards,

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

Tuesday, June 03, 2008

No relief at the pumps
Consumers will see price at the pumps exceed $1.42 a litre

Media release

Conception Bay South, NL, June 3, 2008 - Consumers in Newfoundland and Labrador will see an increase at the pumps this coming Thursday morning when the Public Utilities Board adjusts prices.

“Consumers in Newfoundland and Labrador will experience prices that were higher on only one other occasion; during the Hurricane Katrina and Rita incidents when the markets faced a huge supply disruption. Trouble consumers should have with this is that we have just entered into the start of the hurricane season and markets are already trading on the potential for further disruptions in supply”, said George Murphy, group researcher ad member of the Consumer Group for Fair Gas Prices.

“Consumers will see an added 3.8 cents a litre on gasoline and we’re still looking at heating and stove oils to take an upwards move by close to 2.4 cents a litre. That number may also be pointing the way to a possible increase in diesel as well. Those numbers are based on twelve days of data out of a possible fourteen days available as of release time. An increase to heating and stove oils will mean a new price record for consumers with almost $1.22 charged by some companies in the St. John’s and immediate area.

“Well, here we go again! We are looking at Newfoundland and Labradorians and other Canadians being screwed by traders that are trading on events that have yet to happen. We haven’t seen any disruption in Canadian refiner capacity or supply because of hurricanes, yet we get to pay the lump for speculators and production disruptions thousands of miles away. When are the country and our politicians going to learn to start to protect Canadians from market speculators? Why is there no talk of new trading laws that prevent such speculation? Where is the system of national reporting of available inventory, the security of supply and production data that should be made available to all Canadians? Why hasn’t government looked at the possibility of setting up a new trading bourse in Canada where oil could be traded based on the Canadian condition?

“Ask yourself ‘why not’ when you hear that Venezuelans are paying twelve cents a US gallon for gasoline. Why should Canadians be made to pay the piper for gasoline, heating and stove oils or choose between heat or food this coming winter?

“We’re seeing the ‘same old-same old’ in the markets again the past two weeks; Concerns for supply from places like Nigeria and the Middle East, concerns over available summer gasoline supply and demand factors all remain. A draw-down in crude supply last week also came as a surprise to some speculators but oil still dropped when it was also announced last week that there was an ongoing investigation into trading of oil on the futures markets.

“It may now be June month and we have very little time left before we see the markets start trading on the August buying contract. A lot has to happen to heating and stove oils before we see any drop in pricing there but, so far this summer, fall heating and stove oil pricing are only pointing one way; up.”


For more information, contact;

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