Economy plays a role

Consumers to catch a break

Media release

Conception Bay South, NL, May 17, 2011- Consumers in Newfoundland and Labrador will see a historic first this Thursday when the Public Utilities Board adjusts prices. That's from George Murphy, group researcher and member for the Consumer Group for Fair Gas Prices.

"The downwards pressure continues to rage on oil prices as economic factors start to play in the markets.A simple case of consumers butting heads with price of commodities is mainly responsible as we see that tell-tale drop in demand and a gain in gasoline inventories last week", Murphy said.

"The oil speculators are having their troubles turning things around again as the bad economic news in the United States and news of debt troubles in the European Union both continue to play havoc with the markets.

"The numbers are holding for heating, stove oils and diesel with those fuels showing negligent change. Heating and stove oils show a drop of 3/100ths of a cent, while diesel shows an increase of two tenths of a cent. Those numbers are within my margin for error of three tenths of a cent a litre so, don't look for any change there."

"Gasoline is showing a drop now of 3.3 cents a ltre now, all ahead of the traditional start of the US summer driving season, as the markets traditionally ran up prices in the weeks ahead of the US Memorial day holiday weekend. The season may be a bit of a dud for investors, if the news like the last week gets worse. Today, it was news on house re-sale activity that didn't do investors any favours, and more news dealing with Greek debt from Europe that has investors troubled with the value of the Euro again.

"That helped investors turn their eyes to the US dollar as a hedge against inflation, rather than leave it in things like commodities and the Euro, and the sell-off began last week as a result. It may spell continued problems for oil prices, if European Union money troubles start to come into play again later this week.

"The markets also saw consumers bumping heads with prices as demand fell off. Gasoline inventories showed an unexpected gain along with rising crude oil inventories, a warning sign amidst refinery production at a low 81.7 per cent rate. It was a simple case of consumers getting tired of the high price and choosing to do something else besides drive, and their collective actions spelled trouble for oil and it's related, refined commodities. It was a hard lesson for Big Oil and investors to learn; that if people don't have the money, they won't drive. It was the law of diminishing returns coming full circle. It's as simple as that."

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For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

***Footnote to this release.
Spot prices have caved downwards by 12 cents a litre since May 10th, with consumer prices here still expecting another three and some-odd cents to come besides what I have in the release. Look for further breaks as a result next week. At least, that's the indication so far...