Third week in a row...

Consumers to catch a break

Media release

Conception Bay South, NL, May 24, 2011 - For the third week in a row, consumers in Newfoundland and Labrador will be getting a break at the pumps again this week, if the numbers are right. That's from George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

"Volatility is not the word to describe what's been happening in the markets these last couple of weeks, and it shows in the numbers again," said Murphy. "Fourteen years at this, and I just can't describe what's going on in the markets. The evidence points towards a sell-off, but then there's a complete turn-around and they rebound again, but then they go nowhere. It's a very odd situation.

What's in the numbers

"Heating and stove oils show a slight increase of 7/100ths of a cent and diesel shows down by 3/10ths, close to what they showed last week. There's not much move in distillates which is a little mystifying in light of the non-demand season for heating oils. There should be some sign of a retreat. Its price may be supported as a result of diesel fuel being the world's most used fuel for transportation purposes, and heating/stove oils are also part of the same distillate group. My margin for error is three tenths of a cent, so there may be no change in price at all with those fuels.

"Gasoline is showing that consumers will see a more significant drop in prices with that fuel showing down by 3.4 cents a litre. While gasoline did not show a significant increase in inventory, it was the fact that inventories were up that ended up being reflected in prices again this week. It showed a case of 'enough is enough' by consumers out there, and they also let it be known with demand for gasoline being tepid at best. Of course, these numbers may also be subject to the volatility that was reflected in the markets the past couple of weeks!

At play in the markets

"I think there's still a lot of volatility in the markets out there. Things have not come even yet as there are simply too many factors at play. High prices remain a factor with consumers and that has also hindered economic recovery with disposable income being swallowed up in the United States. We're also seeing the impact of the ongoing debt crisis in Europe as some of the European Union countries namely Spain, Portugal, Greece, Ireland, and now Italy, deal with their debt-load. Austerity programming is not going over well with the citizenry there. The problems with European debt-load is causing a drain on the Euro and that has resulted in a withdrawal in commodities like oil as speculators pour their dollars into the US dollar.

Where prices may be going

"While the US dollar is showing signs of increasing in value, the Canadian dollar has experienced a slight retreat with it's close connection to oil prices. We may be coming close to the end of price drops for now, that is, unless we see some continuation of the factors like the European debt crisis play through, or consumers remain vigilant about consumption and the high price of fuel. But by the look of things, the price drop honeymoon may be over for now."

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For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices