OPEC ideas with oil prices might change your mind

If the Saudi Arabian oil minister is right, and OPEC succeeds in jacking up oil prices well above the July, 2008 record of $147 US a barrel, what would you think?

Good for the Newfoundland and Labrador treasury?

Good for the environment?

Just the other day, a CBC news story quoted Ali al-Naimi as saying that oil prices could surpass the record by the year 2012. In a nutshell, a boon for the OPEC nations that comes with much trepidation and concern for the consumers in North America and indeed, worldwide.

Consider this...

As oil prices hit the record of $147.23 a US barrel last July 7th, consumers were also facing the elevated price of heating oils that hit close on $1.24 a litre. The record heating oil price came close to killing the local heating oil industry here, leading to some radical changes in the ownership of the local dealers. Some retailers sold out leaving the industry here dominated by big oil rather than being influenced by the mom and pop operation.

If OPEC succeeds in driving prices in excess of the old record, will OPEC also succeed in killing the heating oil industry? Will we see an enforced conservation because people simply will not be able to afford to buy heating oils?

What of the affect on gasoline or diesel prices?

No doubt that pricing for refined commodities would hit the roof. The fact that OPEC is even of this way of thinking is both alarming, and a foreboding of the possibility of things to come if you're a heating oil user.

I don't think there's any consolation in OPEC's way of thinking and the provincial treasury simply would not be able to keep up even though the treasury would like the influx of cash. The reality is that OPEC is stepping on insecure ground and it's actions like driving up the price of oil could do more to impact demand by the consumer.

They could end up sshooting themselves in the foot...

But really...Isn't it time that Canadians insulate themselves from OPEC?

Your thoughts?

No change in pricing this week

Just a short note...

No change in pricing for any fuels I cover, at least for this week.

Here's what I have so far, for this pricing period;

• Heating/stove oils up by 53/100ths of a cent.
• Diesel up by 6/10ths, and...
• Gasoline up by close on 4/10ths of a cent.

Hopefully, we'll see a drop next week or, at least see prices steady.

Regards,

George

Update:

Prices to increase again
Refinery outages and political unrest increase oil pricing

Media release

Conception Bay South, NL, May 19, 2009- Consumers in Newfoundland and Labrador will, again see an increase in all fuel prices when the Public Utilities Board sets prices this coming Thursday at it’s regular price-setting, that’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Political unrest and refinery outages south of the border are being mentioned as key reasons why consumers here will see prices increase this Thursday morning. Consumers can expect to see an added two cents on gasoline prices, 2.4 cents on diesel and 2.08 cents a litre onto heating and stove oil pricing this Thursday morning,” said Murphy.

“Rumors are rampant in the markets that there is considerable disruption and loss of life in Nigeria in the delta region over these past few days. Add to that, the fact of several refinery outages and we have the impetus to see prices increase on fears of disruptions again. Even though refinery capacity and utilization rates sit at close to 84 per cent, it seems that the refinery disruption scenario is manufactured by industry and is easily curable and we know that there have been supply concerns from the Niger Delta region for years now. It is inexcusable to see prices increase to consumers with this information!

“Demand figures are, at present close to two percentage points down from last year at this same time-frame. Consumer demand for oil products such as distillates remains low at 14 per cent below last years levels. Jet fuel demand has dropped by almost 11 percentage points against last years numbers and industries numbers are telling us that prices will increase? The information available out there is telling us that consumers in Newfoundland and Labrador as well as the rest of North America are all being taken for a ride this week.

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For more information, contact:

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

Numbers up again

Just a short note as I'll have more later this evening when I have all my data. Here's what I have so far for this regulatory period:

• Heating/stove oils show a 2.06 cents a litre increase coming.
• Gasoline shows an increase of 1.2 cents a litre, and...
• Diesel shows a 2.4 cent a litre increase.

More to follow later this evening, as I have said. I'm looking for that last day of data. I don't anticipate any real changes from what I have here. I'll let everyone know in the meantime.

Regards,

George

Say good-bye to gas under a buck a litre
Numbers show interruption

Media release

Conception Bay South, NL, May 12, 2009- Consumers in Newfoundland and Labrador will experience a significant jump at the pumps when they wake up on Thursday morning, that’s according to George Murphy, group researcher with the Consumer Group for Fair Gas Prices.

“Numbers show that interruption on gasoline prices will occur as a result of elevated spot prices over the last seven days, and since prices were last set by the PUB. The guidelines have been met for prices to move up, in this case by a whopping 7.1 cents a litre according to my data. My numbers do not show other fuels increasing under the rules of interruption even though they are all mostly up as well.” said Murphy.

“The last price setting showed a difference of almost 1.7 cents a litre between my data and that of the PUB. It’s probable that difference could account for prices to increase by only 5.4 cents a litre, still extreme in its outcome to consumers. While the PUB takes a measure of volatility as well, my numbers didn’t start to show that until last Wednesday, a day after the last price setting. They’ve been sky-rocketing ever since.

“Call it the usual in this case. I’m hearing the usual causes of improving economic news, an anticipated pick-up in consumer demand ahead of the summer driving season in the US, or low refinery utilization rates, it’s all there to be heard. The simple fact is that consumers enjoyed a break at the pumps and that has helped put disposable income back into consumers’ pockets. In recent weeks, we’re seeing that being taken away again. Cheap energy helps in a recovering economy. On a local level, this one hurts.”

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For more information, contact;

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

Even my margin of error can't account for this one...

The last two days of market trading have been unusual, but not expected. You might have known that, with signs that the economy is picking up, they'd be going mad on the New York Mercantile Exchange floor again. With oil up almost $9.00 US the last couple of weeks,it was to be expected...

The kicker?...

Numbers for two days are showing possible interruption to occur next week,IF the trend holds up with the gasoline numbers I'm looking at right now.

Keep in mind that interruption needs seven consecutive days where the average exceeds four cents +/- from the previous price setting. My previous average from the Thursday morning upwards adjustment is 44.69 cents for the previous two weeks.

With that said, numbers here show a 5.3 cent a litre upwards movement in pricing, not including taxes. In other words, the first two days averaged 49.95 cents a litre.

Turns out that gasoline, better than a buck a litre, just might be closer than anyone thinks. Just when you thought it might be ok to spend a little more, along comes Big Oil to tank everything again.

I'll keep you all updated!

Regards,

George

UPDATE! Saturday, May 09/09

Five days now show gasoline to increase by 7.3 cents a litre. Two more days to go...

Update! Monday, May 11/09

Six days data now shows an imminent increase to gasoline pricing on the way for residents in newfoundland and labrador. With one more day of data to come, gasoline now shows an allowable increase of 7.2 cents a litre. Spread the word!

Prices to take a down-turn
For now...

Media release

Conception Bay South, NL, May 6, 2009- Consumers in Newfoundland and Labrador will see a slight dip in prices for most petroleum products this week when the Petroleum pricing Office adjusts prices this coming Thursday, that’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.


What consumers should see
“Both heating and stove oils should drop by close on 2.1 cents per litre, diesel also heading down another 2.2 cents per litre. Gasoline will drop by just shy of a penny, 9/10ths of a cent on a litre. If the Canadian dollar were still the same value it was two weeks ago, we’d all be looking at an increase in gasoline pricing instead,” said Murphy.

“All petroleum pricing is down slightly in spite of the increase in crude oil prices, mainly because of the performance of the Canadian dollar against the US greenback. While crude has increased by nearly $8.00 US and spot prices also increased during this time, we caught a break with the Canadian dollar gaining six cents against its cousin. Spot prices for gasoline, for example, increased by close to 15 cents a US gallon but we saw a decrease because of the Canadian dollar closing against the US.”

Summer pricing to come
“My nearest projection for summer gasoline pricing is putting the low end of prices at $1.05 a litre by the last week of June, first week of July. Usually, we see prices spike sharply during and after the US Memorial day weekend, the traditional start of the summer driving season in the US. Paring prices this year is mainly due to a couple of factors, namely; gains on gasoline inventories, sharp increases in crude oil inventory and dropping consumer demand figures. All this could change if any of these factors change, like a pick-up in consumer demand, a drop in inventories, or any further production cut from OPEC. Keep in mind that we will also soon hear about the coming hurricane season when we will all hear traders use that threat to drive up pricing.”

Eye on Marine Atlantic
“Since Marine Atlantic removed fuel surcharges, they also promised to review them sometime in June and make their call as to the placement of further fuel surcharges based on any increase in the price of marine type fuels. So far this year, those numbers are taking the same direction downwards as most distillates and, while we still have another month or so to go before they make the decision of adding surcharges again, so far those prices wouldn’t justify a move at this time. We’re keeping a close watch on this one.

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For more information, contact;

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

Just a quickie!...

Hi all...

Just a quick note to let you all know what we have here so far this period...

So far, we have the following:

• Heating and stove oils down by 2.20 cents a litre.
• Diesel down by 2.3 cents a litre, and...
• Gasoline down by 1.3 cents a litre.

From the looks of things and as predicted, we're going to start to notice a gradual downhill slide with distillate prices as we get into warmer weather.

We should also start to notice that slide particularly as we see a drop in world travel, making jet fuel figures crash with the onslaught of the H1N1 virus (swine flu). Nobody is going to travel while there is a "risk' involved.

Two more days to go so, we'll keep you all updated as we get closer to Tuesday evening...

Regards,

George