Forcing prices up

In a lesson on how to control pricing and in an effort to help control the latest decreases in oil pricing, US refiners hatched a plan: reduce refinery production of gasoline to stop the fall in prices.

So far, it appears that the plan may be working...

Even though crude oil appears to be lower than in days past, refinement of gasoline has been cut, refiner capacity dropping almost 3 per cent in the last week and that has led to a drop in available gasoline so much so, that today, inventories as reported by the US Energy Information Administration dropped by some 110, 000 barrels. That, combined with robust demand figures that show gasoline consumption averaged just 1.7 per cent below the same time last year, are two chief indicators of what could happen next.

If Big Oil is making a concerted move to reduce production, then it is only reasonable to assume that the plan to support domestic retail pricing in order to support future profits, is working. We may be a little negligent into our own reality of pricing, thinking that we're going to see low pricing for a while. It may very well be that in this case, where Big Oil has let it be known that they're not going to produce gasoline where there is plenty of inventory, we've all become a little too used to prices below a buck a litre.

Maybe it was wishful thinking that prices did fall and would stay down for some time...

The truth is, after today's news from the EIA, it may have been a fleeting dream to most and a stark reality at the pumps in the coming weeks, that gas below a buck a litre was all such wishful thinking after all. The ground has been set and the only factor in the markets that can affect Big Oil's latest move is a drop in demand or worsening economic news that will affect that demand.

No one wants worsening economic news but, are we, as consumers, prepared to cut back on our own needs and affect the demand numbers and help turn the tide back in the consumers favour again?

A buck a litre could be home to stay sooner again than what we think...

Regards,

George

Not much change in the numbers

Media release

Conception Bay South, NL, January 27, 2009- Consumers in the province will hardly notice the changes when the PUB moves to set prices this coming Thursday, but that’s not necessarily a bad thing.

“The numbers, with all the data in now, are nothing substantial and that’s not a bad thing. We’d like to see prices dropping and, although they’re not dropping substantially, gasoline will be dropping close to 1.1 cents a litre. After today’s market activity along with all the bad economic news, there will likely be a gradual slide further downwards in pricing over the next few days for all fuels.

“Heating and stove oils are predicted to see an added 8/10ths onto current prices but it’s not expected that the fuels will see another increase in the coming weeks. Even though we’re deep into the demand season for these types of fuels, they are being mitigated by the other fuel I the distillate group of fuels, diesel, that shows a slight drop of 7/10ths of a cent. With the worsening economic news and anticipated inventory builds, I expect to start to see future declines in all petroleum products in the next couple of weeks.

No budget breaks
“Consumers of fossil fuels, who have been the singular positive influence in any economic recovery, failed to see any substantive tax breaks that could have meant something to any economic recovery. The recent drop in fuel prices from year-ago levels has been the singular largest factor in giving consumers back some disposable income and we should have seen more tax relief to consumers as an emergency measure in today’s budget. We’re still subject to taxation on heat and major transport fuels and we’re still paying artificially high prices on consumer items as a result.

“We also didn’t hear anything as regards to government lifting the remaining fuel surcharge off Marine Atlantic rates. Again, we’re still seeing the remaining nine per cent fuel surcharge added to consumable goods into the province and that adds an artificial inflation rate onto goods and services into Newfoundland and Labrador. Marine Atlantic is our highway. Where is the infrastructure money for our ‘highway’ to Nova Scotia?

Inventories remain high
“Inventories of all fossil fuels remain high in spite of the news from some oil companies that they will begin to reduce refinement of products, particularly gasoline. Inventories climbed again last week for the eighth week in a row and another build in crude stocks along with refined product is expected for tomorrow. I fully expect that, if the inventory reports are positive tomorrow, that we’ll be in line to witness the markets come back to economic reality on oil and that we’ll witness further declines in oil pricing.”

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For more information, contact;

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

Not much change...

Hey, Big Oil. Can you spare us a dime?

Six of seven days of data for gasoline and 13 days worth of the same for both heating/stove oils and diesel, all show minimal changes to come this Thursday.

One more day to finally call the shot on the changes, but here's what I have so far:

• Gasoline shows a drop of close on a penny a litre.
• Heating/stove oils are up by 1.06 cents a litre, and..
• Diesel to drop by 1.7 a litre.

We'll have a full run-down on the final tally tomorrow night. Drop in and see me then!

Regards for now,

George

Update #2

Commodities prices spike
Expect interruption to pricing Thursday night

Media release

Conception Bay South, NL, January 20, 2009- Oil prices may have lost some of its steam but the price of it’s related, refined commodities like gasoline continues to climb. Again this Thursday, the Petroleum Pricing Office may very well be forced to use the interrupter formula to adjust prices upwards as a result.

“According to our numbers, prices may rise by as much as 6.1 cents a litre in spite of the recent drop in oil prices. Traders are continuing to bet that demand for refined products will pick up and that’s helping to keep the spot price of gasoline elevated,” said George Murphy, group researcher with the Consumer Group for Fair Gas Prices. “Six days out of seven days data needed, are showing a marked increase in spot prices against the backdrop of oil over the last week.”

“Other markets have seen a steady increase in gasoline pricing as well, some areas by as much as what we’re expecting for Thursday morning. We don’t expect immediate movement on heating, stove oils or diesels but those numbers will probably have increases to retail pricing when prices are adjusted again next week. Right now, they don’t meet the criteria for interruption as gasoline.

“If there is any glaring evidence that traders and investors are responsible, then this is it. In the face of ugly economic news and falling demand, the trader and investor continues to help support refined product prices and that is only helping to thwart any possibility of economic recovery. Until the numbers accent the reality of the world economy, consumers will always feel that they are being taken for a ride as they have been from the last couple of weeks energy trading markets.”

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For more information, contact;

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

Update #1

Lost for words...

Prices may increase substantially by Thursday

Believe it?...

I don't either, but it certainly looks like gas prices will spike next week and I simply don't have a valid explaination as to "why".

All the indicators like inventory and consumption, are down and the economic news doesn't allow for the price of oil to sustain itself. There simply isn't reason to explain it when we've all seen oil drop from the mid 40's to the current $36 US a barrel..

All I figure is that some investors out there are putting all their hopes that demand will eventually pick up and that they're hedging for the future. A lot of people must be. I have to note as well that our local business channel here, BNN, has also started turning it's eyes towards the March buying contracts and they've given up on carrying daily oil pricing, focusing instead on the "months ahead".

Seems everyone is getting in on the act...

Anyways, pricing so far shows a possible spike in gasoline towards 6.1 cents a litre up, that's with five of seven days data recorded. You need a full seven days before the interrupter formula kicks in.

Be warned!...It's coming!

Regards,

George

Oil trades lower, commodities trade steady
No big drops predicted in spite of lower oil

Media release

Conception Bay South, NL, January 13, 2009- Oil may be trading lower but that doesn’t mean that its related commodities are trading lower too. Consumers in Newfoundland and Labrador shouldn’t expect big changes to pricing when pricing is set this week by the provinces’ Public Utilities Board.

“The numbers are down only slightly in spite of the news from the markets that shows declining demand for most fuel products. Heating and stove oils are expected to see a bare 12/100ths down. Gasoline is expected to drop by close on a half cent and diesel is expected to drop by close on three tenths of a cent,” said George Murphy of the Consumer Group for Fair Gas Prices.

“The only thing I can figure here is that there was a heavy investment in the refined commodity rather than an investment in oil, but that doesn’t begin to reflect the reality of the markets. In the face of dropping demand and bad economic news, the price for the refined commodity traded the same all week. The realities of builds in inventory were outweighed here by the talk of refiners cutting back on refining of crude oil products. They are trying to strike the balance between market need and demand factors. Some call it capitalism; I call it direct market manipulation.

“Last week saw a heavy build in crude oil inventory and that didn’t even factor into the markets as it did the week previous. Add to that the fact that all major refined products all saw inventories increase and you really have to ask yourself why these prices aren’t droping more than what’s being predicted. It’s a little ludicrous when we see the factors of supply and demand not playing into the markets rather than becoming key factors in price drops as they have in other weeks.”

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For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

gasprices@hotmail.com

Update #1

Numbers don't show anything, really...

I'm often asked whether prices for petroleum products are fairly priced and, this week is no different than any other, but with one glaring exception.

While the numbers don't show major changes in either heating and stove oils (-4/10ths), diesels

(-6/10ths) and for gasoline (-1.2), we can look back on the markets and take a quick look of why prices will hardly be moving this time around. What you figure you'd be looking at is an exact carbon copy of the performance in the markets over the last three weeks.

Not so, even though the movement of crude probably justifies a larger change in the numbers than what we're expecting. What is distinctly noticeable is the amount of risk that some traders have taken all in the vain hope that OPEC cuts will be far-reaching and that inventory reports will start to show deceases in refined product as refineries are beginning to cut back on production.

Justifiably so? If I were an owner of a refinery, that is. I'd be a little concerned about the falling price. That's why we're hearing a little bit more on some refineries cutting back on production, particularly over the last week or so, and that is the difference between this week's numbers and those of two weeks ago.

If you attempt to limit supply, then prices are sure to either steady out if not increase.

Ill post my final numbers here later tonight as to what to expect. Right now, with six days out of seven days worth of data, there's not much there...

Regards,

George

Numbers confirm prices will rise
Consumers to see an increase in pricing Thursday morning

Media release

Conception Bay South, NL, January 6, 2009- Consumers in Newfoundland and Labrador will experience something they haven’t seen in a while, a price increase to most petroleum products. All indicators point to the Public Utilities Board using its interruption formula to adjust prices this Thursday morning.

“All the numbers are in and they’re not good. As of Tuesday’s market close, consumers in the province will likely see an added 5.94 cents on heating and stove oils, 6.8 cents a litre up on gasoline and 8.0 cents a litre up on diesel fuel”, said George Murphy, group researcher with the Consumer Group for Fair Gas Prices.

“This is a substantial increase caused by market investors playing with the same factors we saw in the run-up in crude oil prices a few years back. We’ve been told for a long time now, that supply disruption concerns have always had a built-in price factor. We’re also seeing investors doing exactly what caused the world economic problem as well; investing in oil without regard for the damage high oil pricing can cause the world economy. They have literally removed some disposable income from the pockets of consumers everywhere.

“We’re seeing them play with OPEC cuts and making bets that they’ll stick and cause a shortage of crude in the markets while we haven’t seen the rest of the bad economic news. They’ve bet on a drop in supply when they should have been betting on a drop in consumer demand. Here’s hoping the investor loses his bet come February.”

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For more information, contact;

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

Update #2
Interruption to pricing possible

Six days out of seven needed for interruption to pricing to occur now show an allowable 5.4 cent a litre increase to heating and stove oils on the way for Thursday morning.

Gasoline shows 6.5 cents and diesel shows an added 7.5 a litre at the pumps for Thursday as well.

All this is coming fast on market traders making bets that OPEC cuts will be adhered to by the 12 member nations in the group. Indonesia was a recent drop-out from the group.

More on how these numbres will look again late tomorrow night but, the writing is on the wall so, fill the oil tanks!

Regards,

George

Interruption to fuel pricing possible

Update #1

From the looks of things, the recent drop in fuel pricing here may have been short-lived.

All data in so far are indicative of the possible use of the interrupter formula by the PUB as of this Thursday. The recent trading of oil, moving from $39 US to Friday's $47 US also showed that refined commodity prices rose right along with the pace in oil.

Heating and stove oils so far, shows an allolwable five cent a litre increase while gasolines show 6.0 cents a litre.

Diesel is showing 7.1 cents a litre upwards.

Not surprising really. I expected that, as there's nothing left to invest in in the markets, the only thing investors have to rely on is good old energy use. I fully expect there to be give-and-take over the next few months.

See how long this one lasts...

We'll have more here on Tuesday night.

regards,

George