Small increases expected

Positive economic news pushes oil upward

Media release

Conception Bay South, NL, January 11,2011- Consumers in Newfoundland and Labrador can expect to see some slight increases to petroleum product pricing this week when the Public Utilities Board moves to adjust prices. That's from George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

"Expect to see some small, upwards moves in prices this week, but there is a warning coming from the markets for next week already", said Murphy." I expect heating and stove oils to increase by just 36/100ths of a cent, diesel to increase by 1.2 cents and gasoline to increase by just 9/10ths of a cent this Thursday morning.

Why prices may increase next week

The real news could come next week. While numbers have been insulated somewhat by the growth in value of the Canadian dollar, there is a heavy investment in oil that has occurred in the past day that could signify a larger increase to consumers next week for distillate fuels that I am watching closely. Already, heating and stove oils, as well as diesel prices, are showing up by two cents a litre for next week, while gasoline shows just an added 8/10ths of a cent. Positive economic news along with an industry report that shows a very modest increase in crude oil inventory.

The United States Energy Department raised its 2011 average crude oil price a couple of dollars today, citing a positive upturn in the economy as reasons why demand for crude oil and refined products will be up. The report also states that heating oil prices will be up higher than forecast initially, increasing the average price per US gallon to $3.28.

Why oil prices could run away

"While I don't think it's entirely possible for oil prices to run away again as they did in 2008, I could very well proved wrong on my guess. The possibility of them running away could do more damage to a recovering economy than benefit one, and economies should be exercising caution. Already with burgeoning economic development in China and India, increased consumer demand from consumers, and the ease for which investors can get money to invest from their respective lending institutions, it can be seen why oil prices could gain such heights again.

"However, I think investors have to show an ear of caution here, and the same warnings have to be shown on the part of lending institutions that may be part of the problem that speculators themselves have been blamed for. You can hardly blame an investor, but if the markets collapse again as a result of an artificial increase in the value of any product, in this case oil, then the whole lending institution business worldwide has to be taught to loan on the basis of reality, let alone on speculation. Lending institutions can also be party to economic collapse as well as party to any recovery."

-30-

For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices