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.”

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For more information, contact;

George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices
gasprices@hotmail.com