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Tuesday, July 29, 2008

On the tail end of last week...
Consumer pricing to drop again

Media release

Conception Bay South, NL, July 29, 2008- Consumers in Newfoundland and Labrador will again see some drops in most petroleum pricing, all this coming on the tail-end of market activity last week.

What consumers will see
“With five days of seven days data needed, consumers will see close to 2.8 cents a litre down on gasoline while heating and stove oils will drop by close to 4.1 cents a litre. The heating-stove oil number may also be an indicator of where diesel pricing may be going as well which will be welcome to the transportation and fishing industries in the province. They’ve been waiting for a long time to see pricing come down.

Cold comfort in the heating-stove oil numbers
“Heating and stove oil numbers have come down in recent days but there is still a long way to come down just to reach year-ago levels. Heating oils will still be 37 cents a litre higher than the same time last year and that’s with this weeks projected drop in pricing included. If we don’t see a concerted drop in oil and related refined commodity pricing, then there is big trouble ahead this winter for consumers. It may be hot outside now but the numbers are providing cold comfort for consumers when looking at last years numbers. There’s still nothing here for consumers to be happy about in spite of recent drops in pricing.

What will oil do in the next little while
“OPEC production is picking up in spite of a drop in demand in recent weeks and that figures heavily this week as we see the numbers change in the consumers favour again. OPEC member Saudi Arabia was responsible for some increase in available crude oil on the markets as the OPEC country promised an added 300,000 barrel increase in June and added another 200,000 starting this July. That second oil increase will make its play in the markets shortly and we’ll see a small move back to the US dollar as an investment rather than commodities-at least for the time being. That may mean some slight relief to come for consumers as both demand and inflation weigh in on overall consumption and the high price of oil plays as a mitigating factor in consumer purchases.

Other factors remain in play
“Consumers still have to be on guard for other conditions that remain in play in the markets. We still have the promise of world geo-political situations like Nigeria and the Middle East and Iran that can show their ugly head at any time as Nigeria did in yesterdays market play. We still have Hurricane Syndrome playing in the markets as well with the markets playing with weather conditions and possible supply and refining disruptions in the Gulf of Mexico. Traders will use anything right now, to help support oil pricing rather than see a decrease caused by market actualities in the future.”


For more information, contact;

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

Saturday, July 26, 2008

First notice...
Numbers pointing down again
Funny title for an article I know...
More to come on this one but, just to let you all know, I'm tracking drops in gasoline and heating-stove oils from the tail-end of market activities last week. Numbers so far, are showing about three cents down on gasoline and four down on heating-stove oils.
Watch the blog Tuesday morning for more coverage on what these numbers will be. I'll have something a little more definitive as the days go by but, remember, anything can happen in the markets on Monday-Tuesday to strike a reverse in things.
Let's keep the fingers crossed...

Tuesday, July 22, 2008

Interruption possible for all fuels
Recent market activity warrants the use of interrupter formula

Media release

Conception Bay South, NL, July 22, 2008 – Consumers in Newfoundland and Labrador can expect to see the use of the Petroleum Pricing Office’s interruption formula this week as all numbers are showing that gasoline and heating-stove oils have met the criteria required.

“Consumers can expect to see the use of the formula for gasoline as well as for heating and stove oils. I also expect that diesel will also fall under the criteria based simply on the most recent market activities. When oil pricing loses as much as it did last week, then you also expect for the related refined commodity to do the same,” said George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

“With five of seven days data at hand, I have gasoline to drop by 9.9 cents a litre and heating-stove oils to drop by 7.7 cents a litre. Initial numbers showed a 9 and 6 scenario was the more likely based on the first two days data. The heating oil number may be a good indicator of where diesel may be going as well. We now have five days and that’s why the numbers have changed. I expect there to be little change when the other two days data become available.

“Markets for oil traded down based on the troubles the markets are seeing with the world economy right now. We’re facing economic slowdown, a drop in consumer demand overall and that has led to some tidy gains in oil and commodity inventories. The previous fears of an economic blockade against Iran and it’s pursuit of a nuclear program abated somewhat and the possible supply disruption scenario from that area was gone from the traders basis for the elevated price. Hence, the consumer will see some relief in pricing this week.

“We know that high pricing has become an undue hardship for a lot of people and we’ve written a note to the Public Utilities Board asking them to pass these substantial savings on to the consumer in this province ahead of the ‘scheduled’ interruption price change to consumers. We want these savings passed to consumers for Tuesday midnight instead of the Thursday implementation just to bring emergency relief to consumers out there. Based on the performance of the dropping price in other markets, I think we should like to see something happen here sooner rather than later.

“Right now, some markets have seen corresponding drops in numbers where there is still competition in the areas involved. Some areas of Toronto have seen pricing drop by as much as what I have on paper for this area now. We need to see some redress to consumers and being as extraordinary situation as we’ve seen in the markets since last Tuesday; I feel that the consumer in Newfoundland and Labrador deserves to see the break early.”


For more information, contact;

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

By the way, be sure and leave any comments you might have. They all help... whether constructive...or

Thursday, July 17, 2008

What goes up...
Must come down...
I know...
This increase surprised me a little too...
I just didn't know anything about retailers looking for the added 1.25 cents on their margins, not that they didn't deserve it now mind you. What makes me sick about it is that the 'majors' will get it too, as far as I know.
All in all, my numbers in the end allowed for an added 7/10ths of a cent a litre (with my margin of error of 3/10ths of a cent) on gasoline and I also had 2.9 down on heating and stove oils. It was that extra 1.25 added that put the screws to my numbers this time.
Here's what I wanted to let you all in on though...
I've been getting a lot of emails on why our prices haven't come down the same as other jurisdictions and I do have an answer for everyone on that...
Hold off as much as you can until next Thursday, the 24th...
Here's why...
Our regulatory system uses what I like to call a "passive" system of regulation; that is, it waits for events to happen in the markets for a two week period and then reacts to what has occurred during that two weeks of business. Prices that were set this morning were set based on the timeframe of July 2nd and July 15th, from a Wednesday to a Tuesday.
Tuesday was when we saw oil first take it's precipitous dip down, if you remember...
The problem here was exactly that; that prices didn't dip for oil until that last day of the regulatory period. Call it bad luck, but other markets including the immediate Toronto markets, saw prices for gasoline hit $1.40 for the same timeframe which is not unusual for what we saw in crude oil prices.
Our prices never moved during the same time...
Here's where we might see something happen the other way however...
The fall in crude oil prices continues, so much so, that my numbres are already showing the likelihood of a interruption scenario taking shape, only this time DOWN in price. With only the first day of the regulatory period on record, already I'm showing dowjn on gasoline by near eight cents a litre and heating/stove oils down by nearly the same.
I'll be cautious on this one though...
Anything can happen in the markets that might see a complete and utter reversal of what Tuesday saw in the markets and the whole interrupt scenario might be thrown to the wind. I'm holding back on my purchases in the meantime in the hopes that we might see something in the offing next week.
You might want to do the same...
George Murphy

Tuesday, July 15, 2008

Gasoline prices to remain steady-Heating and stove oils to drop

Media release

Conception Bay South, NL, July 15, 2008- Consumers of gasoline in Newfoundland and Labrador shouldn’t see much change in gasoline prices this week when the Petroleum Pricing Office sets prices again, that’s according to George Murphy of the Consumer Group for Fair Gas Prices.

What the numbers say
“From the looks of things, gasoline prices may show no change according to the first twelve days of data and today’s market activities. Right now, those numbers are showing almost a ‘break even’ scenario. The numbers are slightly different on the heating oil front. Numbers there are showing an almost 1.5 cent a litre decline and that doesn’t include the market sell-off of distillates we’re witnessing right now. Heating and stove oils may drop more than what we have on paper right now,” said Murphy.

“I would expect the heating oil numbers to be the same for stove oils and that should also reflect a very modest decline in diesel prices. How long will the slight retreat in pricing last would be anyone’s guess at this juncture. We already see a possible winter record for heating and stove oil pricing barring any economic collapse and drop in distillate demand. Today the markets are reflecting the stark reality that we’ve seen all along; that consumers are hurting because of high petroleum pricing. Now that various economies failed to react to the rising costs of oil, we’re seeing deeper economic impact and the likelihood of recession. Because of that, there’s a drop in pricing today because of the fears of a drop in petroleum demand. What traders have sown, the economy can reap.

Not out of the woods yet
“Waiting in the wings are other possible factors that could increase pricing again. We are, of course, into Hurricane Syndrome season and that means possible plays in the markets that reflect possible supply disruptions or disruptions to imports. We remember well Katrina and Rita in September ’05. Venezuela also is promising to cut off supply of crude oil to the United States if Exxon Mobil is successful in freezing the assets of the national-owned Petroleos de Venezuela’s overseas assets. Other geo-political factors remain in play such as the ongoing disruptions in Nigeria, OPEC talk of possible production cuts in the face of a drop in world demand and, of course, consumer demand factors.

Last independent retailer to be sold?
There is some concern over the rumored sale of Tibb’s Oil in the immediate St. John’s heating oil market. I have received a couple of calls this week expressing the consumers concern over the possible sale of the area’s last independent retailer and the effect on the heating oil market if there are no independents left. This should be a concern to most after the recent sale of Forward’s Oil to Harvey’s Oil this past April. If wee see the sale of Tibb’s Oil to some other company, we will have seen the removal of the last independent heating oil retailers from the St. John’s market and that means some possible trouble to consumers of the product. I believe that there will be an adverse affect on the retail heating market in the area and that may lead to one company having a more than obvious dominant market position let alone the removal of competition in the market.
I think that, if the rumors were found to be true, then the Competition Bureau should be made to look at the situation and prevent the sale of the company to just that one retailer. It’s here that we need to stand on guard to protect consumers from any dominant market scenario. The problem here is that high heating oil prices themselves have become a factor in the independents demise. A lower sales volume because of an increasing price may well have been a factor in the sale, if it is true. I’m still trying to dig into this one.”


For more information, contact;

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

Friday, July 11, 2008

Economic warfare 101
Oil is a funny thing...
Give it to one country when there is a high demand and you have the world's attention...
Such is the case of Iran today where oil again, is trading up on the news that Iran will "pull the trigger" if Israel attacks Iran's main nuclear facilities. As a result, there's also a promise of supply disruptions from the Middle east country that amounts to some 4.4 million barrels a day so, if the Israelis do attack the facilities at Natanz like they did at Osiraq in Iraq in 1981, we have a problem. Overall production will not be met by OPEC to cover the needs of an oil-thirsty world and prices will skyrocket because demand will not be met. Spare capacity cannot be met by the group.
A BIG problem...
It's like this. If Iran does disrupt production then we can thirst for heating oil a few dollars more. Gasoline prices will most likely reach unheard of levels.
The likelihood of an attack by the Israelis is good as they've done it before and with perfect execution. Without loss to themselves, Israel launched a daring raid against Iraq's nuclear research facilities by flying below radar over Jordan, the Iraq countryside and below radar defenses. The attacks that knocked out Iraqi facilities was over in less than a half hour and the Israeli air force flew back unscathed to home soil.
If yesterdays missile tests are any indication, expect to hear of a raid carried out by Israeli forces almost any day now. Israel will not sit lightly and wait for Iran to strike first. They've never been one to turn the cheek since Munich .
To tell you the truth, I couldn't blame them one bit.
I just can't stop thinking how much the Iranian government might be making on oil just because it is rattling sabres again, photo-shopped pictures and all.
Economic warfare.
Coming soon to a gas pump near you.
Keep the oil tank filled if you can...

Tuesday, July 08, 2008

Heating and stove oils…

Interruption possible this week to heating and stove oil prices

Media release

Conception Bay South, NL, July 8, 2008- Consumers of heating and stove oils, and possibly diesel fuel, may see an increase in price this week that could be as much as 6.66 cents a litre. That would bring the maximum retail price in excess of $1.29 a litre for the St. John’s and immediate area.

“The numbers I have as measured for the first five days of this regulation period range in excess of six cents a litre. It remains to be seen if during Monday and Tuesday trading those prices backed down as much as oil did in order to avoid interruption. If they never, consumers could be looking at a new all-time record price for heating and stove oils, all at a time that puts the important heating product on life support”, said George Murphy, group researcher for the Consumer Group for Fair Gas Prices. “If they did, then we’re still looking at a possible increase to consumers coming next week. Gasoline will not face interruption to pricing this week. I guess you can say that ‘Pump Day’ is officially cancelled until next week”

“What should bother people is the fact that we’re now experiencing hot weather and that’s the time when traditionally, heating and stove oils have been known to crash but the alarming aspect here is that prices are moving in the opposite direction. Numbers here I worked up are showing that $1.40a litre heating and stove oil is a distinct possibility this winter unless we see a mass retreat in prices. Sad to say but there has to be evidence of heavy economic damage or large inventory builds in distillates before we see any retreat in heating and stove oil pricing.

“Diesel pricing may also be reflected in those numbers although I don’t expect to see as large an increase. Diesel may dodge the interruption process but, if it doesn’t, we’ll be looking at a larger burden being placed on our transportation and fishing industries. They need some sever help but, no one is listening. It might be 25 degrees outside today but there’s more than 25 degrees of separation between what the markets are doing and the actualities that we hear that the markets should be reacting on.

“What the investor doesn’t realize is the fact that, not only are small independent oil dealers being sucked dry by the loss of volume, but they are also destroying the need for heating and stove oils as primary heat sources. They’re forcing people to go to other sources of heat other than petroleum products. They are, in fact, setting themselves up to get burned and, at the same time, radically changing the home heating markets in such a short time..

“Last week it was a drawdown in crude inventory, as miniscule as it was, the ongoing world geo-political situation in Nigeria and more importantly, the Iran situation and their pursuit of a nuclear program and Israel’s promise of an attack against those facilities. Also mixed into the equation is the falling US dollar and investors continuing to hedge against commodities rather than the US greenback. What about the fundamentals like dropping demand?”


For more information, contact;

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

Saturday, July 05, 2008

Don't look now, but...
If the latest numbers are any indicator, the price of home heating oil will most likely take its largest single summertime jump that I have ever recorded...
What does that mean?
In all likelihood, prices for heating and stove oils will take a jump up to the highest yet recorded for the immediate St. John's area to $1.29 a litre for the necessity. In other words, the Petroleum Pricing Office will have to use its interruption formula to adjust pricing.
Not saying it's going to be a definite here but, hey...Be warned...There's a strong possibility...
Blame this one on the speculators again...

Tuesday, July 01, 2008

Numbers pointing down, but…
No big changes to fuel pricing forthcoming

Media release

Conception Bay South, NL, July 1, 2008- Consumers in Newfoundland and Labrador will be surprised to hear that there will be no large price change this time around when the Petroleum Pricing Office sets prices this coming Thursday although the numbers are pointing slightly down.

“Numbers here show that gasoline will drop by 1.5 cents per litre and heating-stove oils by 1.97 cents. Bear in mind that those numbers were for twelve days out of fourteen needed and oil has traded well up from last week which may have brought these numbers closer to a ‘no change’ or ‘0’ level albeit, still slightly down. We may have been victimized out of a substantial downwards move in prices by the rapid changes in the world geo-political situation in the last few days”, said George Murphy of the Consumer Group for Fair Gas Prices.

Reasons why prices are still up
“Continued tensions between Iran, Israel and the United States, supply disruptions that may result from the area along with supply disruptions in Nigeria continue to weigh on crude oil pricing. A falling US dollar and inflation fears also factored into the markets and help support pricing in spite of the promises from the United Arab Emirates and Saudi Arabia to help supply the oil markets with more product. The political situation in Libya and their promise to disrupt supply last week also didn’t help matters.

“Heavy investment continues in the oil markets as the US Federal Reserve continues to stay away from any rate increases that could help bolster the US dollar and also provide that important hedge to inflation fears. It remains a mystery as to why they haven’t raised rates.

Oil outlook for the winter not good
There is no sign of relief in heating and stove oil prices as the markets continue to trade distillates at record levels. Prices on the futures markets are also trading higher than last year and that means no immediate relief coming for users of those products ahead of September. It doesn’t help to see the markets trading distillates higher on word that diesel fuel has become the pre-eminent transportation fuel of choice. Heating oil continues to trade close to $4.00 a US gallon. If pricing doesn’t start to drop back soon, consumers can expect to start the winter heating season with pricing of $1.20 a litre possible.

Marine Atlantic rate increases could have been avoided
Consumers and industry could have avoided taking a hit from Marine Atlantic if the federal company had only implemented some fuel saving arrangements. Tons of fuel could have been saved merely by reducing the speed that the ferries cross the Gulf of St. Lawrence by anything less than a knot. Was it a case of increasing rates as a result of people wanting to get across the Gulf fifteen minutes quicker? If anything, the Marine Atlantic Gulf crossing should have seen its additional costs absorbed by the feds as it is an essential service. Does anyone know what Marine Atlantic does to practice fuel conservation?

Newfoundland Power rate increase to consumers
As a result of oil price increases, Newfoundland Power was forced last week to pass on rate increases to consumers based on oil-generated electricity costs. What should have happened was the provincial government, through Newfoundland Hydro, should have been made to absorb the additional costs to oil-generated electricity. While we can’t interfere with the private operations of the publicly-traded Newfoundland Power, the government could have changed the Hydro Act to get the crown corporation to absorb the oil hit to consumers. We know that Hydro is owned by us, but we still don’t have the power to dictate how it uses its money or its profit; Government does and we are the government. This was a totally unnecessary increase that caused an undue amount of hardship to a lot of consumers. We really won’t feel their full effect until the weather cools down again and we have a good chance of seeing additional increases as a result of the performance of oil. The price may be good for the government treasury but the consumer has yet to see the full benefits.”


For more information, contact;

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