Happy New Year!
Pricing will be down on all petroleum products to start 2009

Media release

Conception Bay South, NL, December 31, 2008- Consumers in Newfoundland and Labrador can start off 2009 with cheaper prices for all fuel products measured as pricing is set to take another precipitous drop this Thursday, that’s according to George Murphy of the Consumer Group for Fair Gas Prices.

What consumers will see
“There’s not much change in the numbers from yesterday. Numbers still show heating and stove oil pricing will drop by 5.78 cents a litre, gasoline to drop by six cents and diesel down by 6.9 cents a litre. The news of this next round of decreases will be excellent for the consumer and, we hope that pricing will continue to drop into the New Year”, said Murphy.

Reasons for dropping prices
“Continuing worries over the economy, good inventory builds and dropping consumer demand for petroleum products have all played an active role in prices dropping this week. We’re hopeful that OPEC cuts will not take their full effect until late February which means that it will be too late to be of any worry to heating oil and stove oil users. Add to that, that if the bad economic news continues, OPEC cuts may have no effect at all in the near future. There simply won’t be a demand for crude oil as there won’t be anyone using it in a stagnant economy.

Historical numbers, if mine are right
“If my numbers are right and we see the six cent drop, we will see 79.2 cents a litre at the pumps. The last time gasoline prices were this cheap was back in July 2003 when gasoline was posted at 79.6 a litre. If my numbers are right with heating oil, we will be looking at pricing reflected of March 15, 2003 when the maximum allowable was posted at 62.67 cents a litre. For diesel, the last time I could find pricing this cheap was on February 15, 2003 when diesel sold for 89.5 a litre. It’s been simply a remarkable turnaround since September.”

Time to drop the nine per cent fuel surcharge
“Businesses in the province should start asking some serious questions about how they are charged fuel surcharges on incoming and out-going freight in the new year. Pricing for transportation fuels has come down quite a bit and they should investigate how much of a break these latest drops in fuel pricing should mean to their bottom line, especially with hard economic times waiting in the wings. Because the New Year is pretty much here, we also have to ask Marine Atlantic when we can expect another adjustment downwards to fuel surcharges to passengers and motor vehicle traffic. The final nine per cent fuel surcharge is yet to be dealt with and this is the month that Marine Atlantic was to top up the fuel tanks. Do they have a time-line they can share with the province on when we can expect the final adjustment to occur? The numbers for residual fuel oils, sometimes used for marine applications, have now bottomed close to March of 2005 levels, just two years before surcharges were first applied. It’s now time to remove the additional nine per cent fuel surcharge.”

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For more information, contact;

George Murphy
Group researcher
Consumer Group for Fair Gas Prices

gasprices@hotmail.com

So, with oil up, prices will be up right?...

Wrong!

The last few days have been interesting ones with oil pricing but, hey, that's my fun game!...

Just a little note here and a little notice to some consumers and users of the "update" and the info I publish on the blog here. Numbers are still showing "down" on heating and stove oils (-5.8/Lt), gasoline (-5.9/Lt), and diesel (-7.0/Lt) with one more days worth of data to come.

The latest round of oil price increases are pure speculation on some traders parts as they play on the fact that there is a "possibility" of some kind of supply disruption resulting from the Gaza violence. Last week showed good inventory builds and that played itself through the later stages of last week as well as dropping demand figures. Traders are playing a dangerous game before the OPEC cuts take their full effect in February month so, I'm thinking that oil will drop later this week as investors go for some profit-taking. See if I'm right on that one later.

In the meantime, if I'm not and oil continues to trade higher on spec, then we may experience some small hiccup in pricing a couple of weeks down the road, unless the numbers warrant interruption by the PUB.

The word then?

After this week's drop in heating and stove oil prices, fill those oil tanks!

More on my final numbers late tomorrow night or early Wednesday morning. You might want to check the blog first before relying on your in-box as the mass mailing sometimes experiences delays of 24 hours or so.

Either way, pricing will be down this week, and all in time for New Years!

Regards,

George

****NOTE: I lost a good cheer-leader due to the acts of a drunken driver on December 26th who took the life of my fourty year old co-hort and friend. I just wish people learn to stop their foolish acts and it is to his memory that this update is dedicated.

Farewell friend, you will be sadly missed!

Prices still dropping

No interrupt this week means larger drop next week

Ok, so we missed out this week, but by the barest of margins. That doesn't mean we still won't see something good happen next week.

Nine days of data now show heating and stove oils dropping by 4.75 a litre, gasoline down by 4.7 cents a litre an diesel down by 5.7 cents.

Not bad, but it's just too bad we didn't see Big Oil willingly drop pricing ahead of when prices are to be set again next Thursday.

Nova Scotians will be looking at a price drop again this coming Friday, their regular timeframe for setting pricing.

Oh well...Keep holding off until then!

Merry Christmas to all!

Regards,

George

Early Christmas present?
Numbers still showing possible interruption

Media release

Conception Bay South, NL, December 23, 2008- Consumers in Newfoundland and Labrador may still find that some petroleum product prices dropped overnight this Wednesday, that’s if the numbers show anything.

“Last week we expressed the possibility that some petroleum prices may come down as early as Christmas morning. Some figures are still showing that possibility although, the numbers are real close. Heating and stove oils are showing 3.4 cents down but that number doesn’t reflect the performance of the jet fuel component which is an integral part of the heating oil mix. If those numbers are showing greater movement that those we have, then we are into interrupter formula territory. The problem? We can’t get a read on the jet fuel number which makes up 75 per cent of the heating oil mix. Consumers should take a wait and see approach if they can do it as, if nothing happens this week, we will definitely see downwards moves for next week on heating and stove oils,” said George Murphy of the consumer group.

“As for diesel fuels, those numbers are showing 4.6 cents a litre down, albeit, close to my margin for error. Again, if you are a diesel fuel user, try and hold off until after Wednesday in case there is movement. There is a definite move downwards for this fuel for next week, if interruption does not occur Thursday. Gasoline is showing 3.4 cents a litre down which is slightly outside the requirements for interruption. Again, if pricing here does not change, then consumers can expect a bigger decrease next week instead.

“On a consumer perspective, bad economic news, dropping demand and good builds in inventories of most petroleum products are good reasons that we will see a continuance of the slide in refined commodities. For now, one can hope that Santa Claus will be coming early again.”

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For more information, contact;

George Murphy
Consumer Group for Fair Gas Prices

***NOTE: This one may be delivered to your in-box late as a result of my late posting. I had to work so, it wasn't possible to get the notice out in time for all. Sorry for any inconvenience this may have caused.

Possible Christmas present for distillate users coming.

Numbers already show we're in interrupt territory

Just a short notice to everyone who tunes in, and please pass the word around on this one.

Numbers are showing possible interruption to all distillate products that I monitor such as heating oils, stove oils and diesel fuels. Numbers there are on track, showing a nickel down on heating and stove oils as well as diesel fuels.

Numbers on gasoline are close, now showing over three cents a litre down, the opposite of what happened when pricing increased earlier this week.

If oil trades lower today, we may see a further effect on gasoline, pushing those numbers also into interrupt territory as well.

Tomorrow may very well prove to be the most important trading day this week as some face the prospect of profit taking after a contentious week on the markets. While bad economic news continues to pour from a broken world economy, oil is also facing the prospects of a complete price collapse after the failed round of OPEC cuts. It is quite possible that nothing can be done from preventing oil to reach as low as 1997 levels, that being $17 US a barrel when adjusted for inflation.

That's what certain energy traders get for producing (and betting on) documents predicting $150 a barrel oil in the first place.

Mom used to call it "getting your just desserts"...

I'll post here again later Sunday night just to let you know what data I have after five days rather than just the two I have now. Remember...Seven days needed for interruption to occur.

Regards,

George

Mid week rise in crude to cost consumers
Gasoline to increase, distillates to fall

Media release

Conception Bay South, NL, December 17, 2008- Consumers in Newfoundland and Labrador will experience a slight bump in gasoline prices this week when the Public Utilities Board moves to adjust prices this Thursday.

“The sudden rise of crude oil to near $48 US a barrel Thursday of last week also brought with it an increase in the basic cost price (spot) of gasoline and this is going to affect consumers to a degree. We would have hoped that prices would have kept falling but, bad news and speculation late last week from OPEC and the chance of a major production cut in the offing, both helped to increase spot prices to all fuels. However it is only gasoline pricing that will experience an increase, that amounting to 3.1 cents a litre at the pumps on Thursday”, said George Murphy of the Consumer Group for Fair Gas Prices.

“Numbers show the rapid rise in spot prices that began shortly after the huge adjustment down last week. We also expected to see a much larger drop in distillate prices carrying on from last week but the increase in spot prices mitigated that. Numbers are still showing down by 8/10ths of a cent for heating and stove oils and 1.3 cents a litre down for diesel fuel.

“Since the spike last week, I have recorded a steady decrease, albeit slow, that hopefully will translate into this increase in gasoline as being an anomaly in the petroleum markets. Considering that the markets are now speculating that any OPEC cuts will have no effect on oil pricing, we can hope that there will be further decreases to come for all fuels in the coming weeks. The economic news just keeps getting worse and that has helped to play into market traders fears of lowering demand for fuel products and those fears are slowly translating into fact.”

-30-

For more information, contact;

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

Any comments?

If OPEC cuts production...

Here we go again...

At OPEC's next meeting on December 17th in Oran, it is widely expected that the oil group will institute one of the biggest production cuts that it has ever implemented. Not to be out-done, the group is also asking the wild card in the market, Russia, to meet an "obligation" to help the group put the brakes on the slide in oil prices.

While a distinct possibility that OPEC will bring in a major cut amounting to close to an expected 2 million barrels, I don't expect the Russians to follow suit with OPEC. Russia wants more customers for it's oil and, weaning their way out of any possible OPEC influence just might be the way for the Russians to gain some further world economic influence. Don't expect the Russians to follow suit even though they're just as badly in need of US currency as anyone else. There is a vested interest for the Russians not to follow OPEC's lead as there is to follow the price-fixing cartel.

So, what would the effect be on pricing if OPEC did close the door on some production?

To OPEC, there is no sense in allowing further export of a product that, right now, is in low demand. The danger to OPEC here is that oil will rise again and bring a renewed interest in oil fields that have a higher initial capital cost to them. In other words, keeping the price low would effectively keep other oil fields from being developed. If I were an OPEC member, there can be no doubt that I would attempt to sway fellow members into letting oil freely flow, at least at present levels, and help keep the price of oil low for the sake of keeping other projects off the radar.

Witness Alberta...

With major projects in the oil sands being shelved and workers heading back to their home provinces and countries, it would be a little inopportune for OPEC to help support the price and help keep the projects going. OPEC needs to get these workers out of Alberta and help keep Alberta from being a major supplier to Uncle Sam. It would be a very long re-start before any other fields open in the tar sands if OPEC simply waits the ebb-tide out. That's why it's not likely that Russia won't follow the OPEC lead; there's a chance for the country to gain more influence on oil sales to the US.

December 17th, we'll find out if OPEC will really pull the trigger...

But, if they do cut in the face of the most recent economic news, the markets simply haven't paid OPEC too much attention in the face of a prospect of a two million barrel per day cut. While oil has increased in value by about five bucks since last Thursday's price change, it has since fallen back by another three to sit at $44 bucks US. In other words, while we might see a slight hiccup in prices, it's not likely that OPEC is going to impact price until Russia joins in the fray and then, they both might have more to lose. There's a prediction out there from the International Energy Agency that says consumption of oil will be 500,000 barrels per day less as a result of the downturn in the world economy and they don't have the full scope of the economic damage yet. After all, after losing $103 US a barrel since the first week of July, does anyone?

********************

Six days out of seven show little change in heating/stove oils, just a bare cent down on diesel and a rough 2.9 up on gasoline. I'll have more concrete numbers later tonight so, look out for the press release then!

Regards,

George

Update #3:

An early Christmas present on the way
Consumers to see substantial drops in all petroleum products

Media release

Conception Bay South, NL, December 9, 2008- The numbers confirm it. Interruption to all fuel pricing will occur Wednesday night on heating and stove oils, gasoline and diesel fuels, and the drops there will be substantial, that’s if the numbers that the consumer Group for Fair Gas Prices have been tracking are any indication.

What consumers should expect
“According to the numbers, heating and stove oils will see a drop of 8.25 cents per litre while, gasoline will drop by close to 8.3 cents a litre. The real gift to the Newfoundland and Labrador economy may very well be for diesel as that fuel is projected to drop by a whopping 10.5 cents per litre after taxes are accounted for”, said George Murphy, group researcher for the consumer group.

“We can say fairly that, with the drop in diesel pricing, areas of the Newfoundland and Labrador economy should start to see the removal of some of the fuel surcharges that they were forced to pay for the movement of goods and services that affect the consumers in the province. Diesel prices have now dropped by almost 35 per cent against the peak prices paid in early July. Our fishing industry should be able to catch gains from cheaper transportation costs as well as the difference in the Canadian dollar against the US greenback as well.

“OPEC last week, failed to come to any agreement on any substantial cuts to production as overall demand for oil has dropped along with the ill performance of the world economy. There still lies a chance that OPEC will make some sort of drastic cut when they meet again on December 17th. Some gains in inventories have been realized in recent weeks except for last week, which showed the first draw-downs on available refined products in North America in some time. It is my belief that there is enough available inventory of heating and stove oil inventories to make it through the rest of the winter so, I don’t expect to see any substantial increase in heating and stove oil prices unless OPEC steps in to address world over-supply or demand for distillate fuels show a great increase. Any further drop in refiner capacity which was measured at just over 84 per cent, may also affect distillate supply. A drop in production wouldn’t be surprising if Big Oil knew it would help support the price of the refined product either.

Fuel surcharges
“As the busy Christmas travel season is about to start, consumers should be asking serious questions about the last remaining fuel surcharges on things like air travel and Marine Atlantic ferry rates. It should not be acceptable for Marine Atlantic to let fuel surcharges wait until January to be lifted when they place their orders for fuel at that time. They can easily place an order for fuel now and have the difference in fuel prices reflected back to the amount of inventory then on hand and adjust the surcharges accordingly. Why wait until January to bring relief to the consumer and industry who use the service?

NL Power should adjust pricing
“When will we hear from Newfoundland Power or the Public Utilities Board on any adjustments to electricity with the drop in crude oil prices? It’s about time we hear from them to find out what the consumer can expect to happen to electricity rates in the coming weeks. Businesses will be forced to pay an additional 50 cents an hour to wages and, I’m sure that they can use the savings from electricity rates to help defer the costs of higher minimum wages in these tough economic times. Consumers will also expect to see lower electricity rates to hand in hand with the heating relief program just introduced by the government.

Some crude facts
1) The last time spot prices were this low for heating and stove oils was recorded on September 19th, 2006 when spots hit a then record 48.95 cents a litre.
2) The last time spot prices for gasoline hit this low was on June 14, 2002 when the spot price was recorded at 30.22 cents per litre.
3) The last time crude oil traded close to yesterday’s close of $42.07 US was on July 28th, 2004 when it closed at $42.80 a barrel.

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For more information, contact;

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

Still on track for a big drop in pricing

Update #2

Hi to all...

Six days data out of seven days needed for interruption to occur are now showing the following after todays trading:

1) Heating/stove oils to drop by 8.02 cents a litre.
2)Gasoline down by 8.1 cents a litre, and
3) Diesel down by 9.0 cents a litre.

While oil traded up almost $3.00 a barrel US, the Canadian dollar showed strength and picked up almost four cents against the US greenback. Even though spot prices picked up in value with extensive trading on the markets, the difference in the dollar against Friday's finish was enough to absorb any shock to refined commodity prices and the numbers failed to move when converted over to Canadian values.

I expect the prediction to hold after tomorrow's trading and for the interruption to pricing to happen this Thursday as predicted.

I'll be in touch with an official press release tomorrow night with all seven days of data and the final numbers then.

regards,

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

Interruption to pricing now likely

UPDATE: Looks like all fuels regulated under the guides of the Petroleum Pricing Office will face interruption this week coming. Here's a breakdown of what's likely to occur this Thursday.

You might want to spread the word on this one as the numbers are substantial here:

• Heating/stove oils show 8.0 cents a litre down so far.
• Gasoline shows 8.1 cents a litre down.
• Diesel shows almost 9.0 cents a litre down.

With two more days of information to come, I don't expect the numbers to change too greatly but, be warned that anything could happen out there in the markets and the data could change. They may even be greater than what I have here now.

Regards,

George

Complete collapse of oil prices coming?

Boon to consumers in Newfoundland and Labrador though...

If Merryl Lynch and Platt's are right, then the provincial treasury of Newfoundland and Labrador may not score the large surplus for this year that was expected for this fiscal year.

That's not the best of it...

According to figures from the EIA out of the US, we may have already reached the point where the provincial treasury may be grossly affected by the drop in crude prices. While there may still be a slight chance of balancing the expectations for this year, if the markets hold true, that we will be in recession for close on two years, then the royalties paid back to the province will almost be a pin-drop compared to this year. Twenty two gravity oil is trading at $37.76 a barrel while I have the break even at $36.63 for the budget to be affected. 34 Gravity oil unlike that of Hibernia, is now trading at close to $45 bucks a barrel. The finance department must be on the edge...

Wait for next year...

If the stories are true, it would underscore the estimate I had in July of possible $60 per barrel oil that I expected would happen if a recession hit, a recession that would be caused by excessive and artificially inflated energy pricing. What a kick in the teeth!

We're almost there...

Merryl Lynch is now reporting possible oil pricing of $25.00 US a barrel for West Texas Intermediate type crudes which, if the pattern follows, makes Brent type crudes, of which Newfoundland and Labrador crudes are priced, around $4 bucks less than that. A pittance in royalties could be on the way for the Newfoundland and Labrador treasury but, it could prove a boon to the consumer of gasoline and heating oils.

How low can consumer pricing go in Newfoundland and Labrador if that scenario were to happen?

How does 74 cents a litre grab you for gasoline and 41.5 cents a litre for heating/stove oils sound? (Depending on the retailer you buy off, mind you)...

One can only wish that prices go so low that we don't have to see the malls blocked with people trying to keep warm this year and one can only wish that we'd have no need for a heating rebate program as well.

Those last two realities may be closer than we think, that's if OPEC stays out of the mess in the markets, like the Russians are...

Keep the fingers crossed!

NOTE: In the meantime, I am also tracking some nice drops in all three groups of fuels I Measure. There is a possibility here that we could see interruption for gasoline, heating/stove oils and diesels for next week, so keep an eye out here Tuesday evening for any word on that.

Regards,

George

Prices keep dropping
Gasoline and heating oil prices to see further retreat

Media release

Conception Bay South, NL, December 2, 2008- Consumers in Newfoundland and Labrador will see prices for most petroleum products drop again this Thursday. Oil prices and its related refined commodity prices, continue their slide in the face of worsening economic news and the failure of OPEC to address a market oversupply.

“Prices for gasoline are expected to see another 3.2 cents a litre down this Thursday while heating and stove oils are expected to drop a further 4.2 cents a litre. That number may be slightly off the mark for winter heating oils as they are now subject to a winter heating blend of #2 and jet fuel but, it should be a good indicator of the direction pricing will be taking. Diesel fuels are expected to drop another 1.2 cents a litre”, said George Murphy of the Consumer Group for Fair Gas Prices.

“OPEC has so far, failed to address any over-supply of oil in the market as they did in the run-up to production cuts in the late 90’s. Their failure to cut back on production led to oil prices that hit near $11.00 US a barrel. It was only when oil hit rock bottom that OPEC instituted a round of cuts that saw oil prices rebound. If this is another scenario like this being played out, then there may be no end to the drop in oil prices and there could be some grave consequences to some aspects of the offshore oil industry. It may be good for the consumer however, and that is a positive thing that will also help motivate economic recovery. OPEC will have a regular meeting on December 17th that will, I believe, contain the news of further cuts to production to help stem the fall of oil prices but, it may be ‘too little, too late”.

“Inventory data out of the United States still shows good building of inventories of gasoline as consumer demand remains crimped by bad economic news. This is another week of gasoline inventory gain and only very slight inventory draws of distillate that still is supplying some means of support to heating oil and diesel prices. If inventory starts to build there, we could see further slippage in distillate pricing before the onset of winter.

“Interesting facts are apparent here at today’s price. Spot prices for gasoline are now almost 9 cents a litre cheaper than what they were on May 19th, 2005 while, heating oil prices were almost six cents a litre cheaper than today. Oil on that date was priced at $46.93 against yesterday’s close of $46.96 a US barrel. The retail gasoline price on that date was 99.9 a litre in the immediate St. John’s area. The last time we saw prices below 90 cents a litre at the pumps was the week of January 15th, 2005.”

-30-

For more information, contact;

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