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.”

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For more information, contact;

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