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Tuesday, June 15, 2010

Numbers up slightly
Crude oil increases and so do prices

Media release

Conception Bay South, NL, June 15, 2010- Consumers in Newfoundland and Labrador will see a slight upwards adjustment to most fuel prices this coming Thursday. That’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Numbers show slight upwards movement with the exception of diesel, which shows a modest 1/10th of a cent drop coming this Thursday,” said Murphy. “I expect heating and stove oils to increase by 1.28 cents a litre and gasoline to increase by a penny on a litre. That’s not out of line with what has been happening on the markets. Oil prices have increased by seven bucks a barrel US over the past two weeks. In spite of that increase in crude prices, we’ve seen but two cents on gasoline prices, mainly due to the corresponding increase in the Canadian dollar against its US dollar counterpart.

Crude slowly climbing, but for how long
Oil is increasing as a result of a corresponding increase in the Euro, which has gained close on four cents against the US dollar. That makes commodities like oil and refined products a little more attractive to investors. In order to see oil drop again now we have to see several factors come into play, and I’m still expecting them to kick in. Among them, look for news from the European Union from member countries like Greece and Spain; show their ability to keep ahead of their payments against their debt while carrying out their austerity programming. Also, the economic damage being caused by the oil spill in the gulf could potentially play a key factor in any ongoing US economic recovery efforts.

Average crude oil prices are down overall
“While crude oil may be rising, the numbers are still well down from what was projected in the last provincial budget and that must be taking a huge bite out of the province’s treasury. The losses in royalties, combined with a drop in the collection of taxes on fuels have conspired to impact the provinces take from high energy prices. It may be a break for the consumer but the province had better hope oil increases well past the $83 US for West Texas Intermediate projected for the next few months if it hopes to meet its fiscal targets.

Numbers so far

Here’s a breakdown of what I have for average oil prices so far this fiscal year:

April, 2010: $84.82 WTI
May, 2010 : $72.54 WTI
June, 2010 : $73.41 WTI

Numbers are within summer ranges
“The numbers at the pumps still remain close to the summer peak projection of anywhere between $1.10 and $1.14 cents for a litre of gasoline. Barring any other significant factors like OPEC cuts or hurricanes in the Gulf of Mexico, I expect the projected summer numbers to be close to those projected a few months back. I don’t expect the oil spill in the Gulf to affect prices. If there is a disruption, it will be with imports into the Gulf region and there are other ways of piping oil from one side of the US to the other, the same events that occurred after Hurricanes Katrina and Rita in 2005. It’s steady as she goes, for now.”

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For more information, contact:

George Murphy
Group researcher/Member

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