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Tuesday, August 28, 2012

Update #2

Isaac is still in play…

Consumers will pay more this week

Media release

Conception Bay South, NL, August 28, 2012-Hurricane Isaac has played a rough coarse on gasoline numbers to consumers this week, but it hasn’t hit land yet. The real news to consumers may come after damage assessments start in the Gulf of Mexico tomorrow. That news from George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

Isaac takes a swipe

“Numbers are very volatile for the last two days of the regulation period. That was all due to the final track of Hurricane Isaac when the storm’s course became clear that it would result in supply and refining shutdowns,” Murphy said. “It’s clear that the storm has had an effect on prices, but the story may not be over yet for the play by the wolves in the marketplace. Things will be a little volatile in the markets for a bit until any storm damage becomes evident.”

The numbers

“Numbers show just a minute rise in distillate fuels with heating and stove oils forecast to increase by just 61/100ths of a cent and diesel to rise by just 8/10ths of a cent. Gasoline prices are predicted to increase by 2.7 cents a litre, but that number may be off somewhat because of volatility in the markets for both Monday and Tuesday. I am cautious about the gasoline numbers!”

Storm damage may cost consumers next week

“It’s ‘wait and see’ for next week. Depending on how long it takes for refineries to come back to working order will determine just what damage it will do to consumers pocketbooks. With this storm being agonizingly slow to move across the Gulf of Mexico, it is promising to be a heavy rain event with much flooding being predicted. It’s rain that takes most refineries off-line, and not necessarily the winds. Most of these facilities can stand a certain amount of that, but rain and refining are not a good mix. Depending on how much refining will be disrupted depends on how much prices will be impacted. Right now, there’s approximately 900K barrels of production off-line and not available to consumers. Rain means flooding, and that means electricity has to be turned off, and it takes time for refineries to re-boot again after a shutdown.”

“I expect to be some kind of market play, although not as much as the Katrina and Rita events of 2005, but again, that depends on the damage. Isaac is coming ashore as a category one, whereas, Katrina came ashore as a category three. Consumers and government alike in the US won’t stand for Big Oil to make the market play like that again. Back then, consumers in Newfoundland and Labrador saw the St. John’s and area hit $1.48.1 at the pumps, while other regions of the country briefly hitting $2.25 a litre in the Newmarket, Ontario markets, and $1.89 a litre briefly in the immediate Halifax, Nova Scotia markets. I don’t think they’ll see that repeat again either, but they will be subject to an increase elsewhere as well.”

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For more information, contact;

George Murphy

Group researcher/member

Consumer Group for Fair Gas Prices

Twitter: @GeorgeMurphyNDP



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