Update #2 Oil trades higher
Consumers to take a hit this coming Thursday morning
Media release
Conception Bay South, NL, March 9, 2009- Consumers in Newfoundland and Labrador will see another increase in gasoline prices this coming Thursday as oil prices and their related commodities continue to trade upwards, at least that’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.
“Gasoline has taken a big jump upwards over the last two weeks, buoyed mainly by an increase in demand and the sudden fall in the Canadian dollar. We’ve lost six cents against the US greenback in the last two weeks and the sudden fall in the dollar should be a continuing concern in the determination of fuel prices. We’ve lost an added two cents a litre as a result of the dollar difference there.
What consumers will see
“I expect gasoline prices to increase by four cents a litre this Thursday with stove oils increasing by just 12/100ths of a cent and diesel to also increase by close on 3/10ths of a cent. The stove oil number may be reflective of little or no change in heating oil prices as well. All these numbers are based on 13 out of a possible 14 days data. The price increase will be less than a seven cent a litre increase in the Halifax area but reflective of continuing market volatility.
Markets show continuing volatility
“If you’ve been watching the markets, you probably have also noted the price swings in everything from oil to our dollar. There’s a continuing level of distrust in the markets based on the lack of any positive economic news. Unemployment numbers are continuing to increase but, that’s not reflective in the oil numbers. You’d expect to see a drop in consumer demand but, that’s not happening now. There’s some complacency returning to what consumers see as a ‘lower price’. We’ve also witnessed a draw-down in crude inventory from the strategic supply at Cushing, Oklahoma where WTI is mostly bargained and priced for.
Work for the wood fibre industry?
“I’m surprised at any response that has been given as regards to the major closures and shut-downs in the wood fibre industries in the province. Here, we have a renewable resource that has seen concentration in making paper rather than the province looking at the other alternative in the troubled industry. I believe that the time has come for the province to carry out a bold experiment in the manufacture of methanol/ethanol from wood fibre . Here we have a viable source of supply for another aspect of the petrochemical industry and it has not been looked at as of yet. While ethanol is derived from other sources like corn and wheat, we can help stymie any increases in food costs by helping change where we get oxygenates from. Oxygenates are used in gasolines and other fuels to help with more complete burning of fossil fuels and they’re less harmful to the environment. If we can show that it would be easy to manufacture here, we have that chance of getting into another aspect of the petroleum industry rather than the traditional and we’d also help put unemployed lumber industry workers back to work.
Market highlights
* The Canadian dollar loses almost six cents against its US counterpart resulting in an added loss to consumers of close on two cents a litre as a result.
* Consumer demand for gasoline increases by just over two per cent over last years figures for the same timeframe last year.
* Refinery capacity still recorded as low at just over 83% utilization, that’s just up slightly against last week’s figure of 81%.
* Oil prices continued to climb from $38.96 US on February 24th to today’s $47.07 US a barrel at market close while, gasoline spot prices rose an average of 41.28 cents a litre from 38.88 cents a litre at the last price setting.
* Markets are also playing on fears that OPEC will meet on March 15th coming to institute another cut in production by an added one million barrels per day.
* As reported by the United States Energy Information Administration last week, gasoline shows just a marginal increase of 200 thousand barrels of added inventory from the week previous.
* A draw-down in crude oil inventories last week helped oil prices to increase although oil inventories were recorded at almost 45 million barrels over the same timeframe last year. Distillate inventories also showed a marked increase as a result of drops in demand of diesel, jet fuels and heating oils. The drop in jet fuel demand is recorded at just over 15 per cent below last year’s levels for the same timeframe.
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For more information, contact;
George Murphy
Group researcher/Member
gasprices@hotmail.com
