The battle shaping up...

Interesting, to say the least!

In an almost unprecedented move, Asian countries have now joined in what appears to be a global move to bring energy prices downwards to spur economic activity and recovery.

Seems to be a recognition out there from governments that OPEC's long-standing goal of keeping oil prices up is going to be a hard job.

The United States and some European countries rallied together on Thursday to release some of their crude oil reserves to the world markets, not long after OPEC met, to meet a shortfall of global crude stocks and in an effort to bring down the price of oil to bolster economic recovery. OPEC failed to increase production the other day that would have dropped crude oil prices, but the meeting to discuss production increases amongst member countries failed, spurring the move by western countries.

Brent crude shows a drop so far today by close on $1.40 a barrel, while West Texas Intermediate is down slightly by close on sixty cents. Not a big lot, but it's starting to show on refined commodity prices.

I'll be in touch, but it's off to the west coast of the province Monday.

Regards,

George

Could be short-lived

Volatile week results in a break for consumers

Media release

Conception Bay South, NL, May 10, 2011- Consumers in Newfoundland and Labrador will see something that they haven't seen in a long time when they wake to lower prices this coming Thursday morning. That news is from George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

"Enjoy the drop in prices for now, because it may not last long," said Murphy. "Prices are already starting a meteoric climb since last week's drop in oil prices and oil's refined commodities are leading the charge. Consumers in the rest of Canada will be tagged tonight with further increases in prices and numbers are showing a trend toward increases to come to consumers here for next week. I have never seen a week of volatility like this since the Katrina and Rita hurricane events of 2005. There's a lot of instability out there."

Prices to drop

"I have heating and stove oils to drop by 6.86 cents per litre, which is a welcome break to users of that fuel. I'm hoping that pressure will ease off the important heating oils, but there is already a small upwards movement in prices above my average for the last week, which is not good news for next week.

"Diesel fuel shows a downwards move this week by 6.9 cents a litre but is also trending upwards for next week's price setting, showing a two cent a litre increase so far
.

"Gasoline now shows a drop of 2.8 cents a litre, now a full four cents off what the numbers showed after just one day of data last week. It's indicative of what has occurred in the markets for the past week. Numbers for gasoline are already showing that, if the trend holds, consumers could see an increase coming of up to six cents a litre if the trend holds for the next seven days. The markets could in fact turn the opposite way again before then, so I'm insecure about saying what is the definite here for next week, but there is a trend developing."

Putting the screws deeper

Big Oil is having a field day and speculators are in for the ride now. Oil has dropped by sixteen bucks US the past week trading down from $113.93 US on April 29th to drop back to $97.16 US on May 6th, only to recover to $103.88 for today, May 10th. In that time, refined commodities have climbed back up to April 29th levels again with oil off the 29th mark still by ten dollars US a barrel. I can't find a reasonable explanation as to why that is, but someone out there in the realms of the speculator is now making a heck of a lot of money. Best thing is, is that they don't have to explain it to anyone. They're no longer accountable. I'm willing to bet that refined commodity prices will not show a retreat while oil still advances to it's old mark set last week, then you'll know."

"Other region of the continent will be in for sticker shock, particularly our US neighbours. They'll take a hit upwards tonight by thirteen cents a gallon and diesel will increase by another nickel US. Other areas of Canada will also take a hit tonight with Toronto prices climbing another three cents a litre and other regulated markets possibly taking a more substantial hit later this week. This volatility in the markets is playing itself North America wide. I believe that the economy is soon going to pay the price if there is no retreat in fuel pricing. I believe that we've arrived at a breaking point."

-30-

For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices.

Numbers are in
But can they be trusted?

Hi to all...

After last weeks "shenanigans", I don't know what's going to happen with the numbers this week. I'll be blunt.

But, here's what I do have.

I haven't changed my sources or the way I have done things.

Let's see if they did...and see if my numbers come back on track. I know the "Stove" number is solid.

• Heating and stove oils show an added 2.88 cents up. Keep in mind again that the stove oil number is a rough guide on where heating oil numbers could go.The number is the same as the stove number in the non-winter season. During winter, they throw in kerosene into the stove oil number and that acts as an antifreeze agent.
• Diesel shows an added 2.0 cents a litre up, and...
• Gasoline shows an added 8/10ths of a cent.

There is volatility in the numbers.
The first five days of this session showed oil and related commodities up and still climbing from last week, all on steady demand and a draw-down on inventories.

And then the IMF and IEA weighed into the fray on Monday.

The last two days with the oil sell-off, numbers have been all over the place. It's a sign that markets are unsure and that there's some doubt over continuing demand for oil and it's related, refined product. That fact showed itself with the International Energy Agency adjusting its world demand figures for oil downwards. The reasons for that are quite apparent: that world economic recovery could be hindered by high energy prices.

That started the retreat and oil's strategic withdrawal.

That's it for me for this week, but keep an eye to your email for a special invite from this poster for later this week!

Regards,

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

Prices keep dropping
Gasoline and heating oil prices to see further retreat

Media release

Conception Bay South, NL, December 2, 2008- Consumers in Newfoundland and Labrador will see prices for most petroleum products drop again this Thursday. Oil prices and its related refined commodity prices, continue their slide in the face of worsening economic news and the failure of OPEC to address a market oversupply.

“Prices for gasoline are expected to see another 3.2 cents a litre down this Thursday while heating and stove oils are expected to drop a further 4.2 cents a litre. That number may be slightly off the mark for winter heating oils as they are now subject to a winter heating blend of #2 and jet fuel but, it should be a good indicator of the direction pricing will be taking. Diesel fuels are expected to drop another 1.2 cents a litre”, said George Murphy of the Consumer Group for Fair Gas Prices.

“OPEC has so far, failed to address any over-supply of oil in the market as they did in the run-up to production cuts in the late 90’s. Their failure to cut back on production led to oil prices that hit near $11.00 US a barrel. It was only when oil hit rock bottom that OPEC instituted a round of cuts that saw oil prices rebound. If this is another scenario like this being played out, then there may be no end to the drop in oil prices and there could be some grave consequences to some aspects of the offshore oil industry. It may be good for the consumer however, and that is a positive thing that will also help motivate economic recovery. OPEC will have a regular meeting on December 17th that will, I believe, contain the news of further cuts to production to help stem the fall of oil prices but, it may be ‘too little, too late”.

“Inventory data out of the United States still shows good building of inventories of gasoline as consumer demand remains crimped by bad economic news. This is another week of gasoline inventory gain and only very slight inventory draws of distillate that still is supplying some means of support to heating oil and diesel prices. If inventory starts to build there, we could see further slippage in distillate pricing before the onset of winter.

“Interesting facts are apparent here at today’s price. Spot prices for gasoline are now almost 9 cents a litre cheaper than what they were on May 19th, 2005 while, heating oil prices were almost six cents a litre cheaper than today. Oil on that date was priced at $46.93 against yesterday’s close of $46.96 a US barrel. The retail gasoline price on that date was 99.9 a litre in the immediate St. John’s area. The last time we saw prices below 90 cents a litre at the pumps was the week of January 15th, 2005.”

-30-

For more information, contact;

George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices
gasprices@hotmail.com

2008-09 Could be another expensive winter
Heating oil costs expected to meet or beat last year’s numbers

Media release

Conception Bay South, NL, October 9, 2008- Consumers in Eastern Canada can expect to pay the same price as last year for heating oil product and they have a good chance of setting new records for the fuel, that’s from George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

What we may see this winter
“Consumers are facing an uphill struggle again this winter as several factors have played into the marketplace to work against the cost of heating and stove oils. As of today, we are presently 16 cents a litre higher than where we were last year and we are also facing a lower Canadian dollar. That in itself has cost the Canadian consumer an added six cents a litre this past week and is going to be hard to overcome,” said Murphy. “If these numbers hold up and nothing else changes and we see the same rate of increase as last year, we have a good chance of the consumer paying upwards of $1.38 a litre for heating oils this winter if I pare that with last years record of $1.22 a litre. That, I caution, is a number based on the actualities I see now and not the actual that may occur if consumers are faced with other outside issues or circumstances. Pricing may be mitigated somewhat simply because consumers won’t be able to afford the product in the first place.”

The “If Factors”
“We do have some conditions in the markets that may change the playing field and they remain a lot of what I call the “If Factor”. Refiner capacity, for example, remains at a historic low and this has affected the building of heating and stove oil inventories. They simply did not increase during the off-use season. OPEC is trying to put together an emergency meeting to discuss possible production cuts in an effort to help sustain pricing. If they cut production in the face of economic slowdown, then we can expect pricing to be supported. There are, of course, other geo-political conditions I don't need to touch on here.

Changing conditions
“Consumers can see the opposite happen if recession hits. Again, prices have a slight possibility of decline if the use of distillate fuels drop because of the economic downturn but that has also to be matched by an increase in refiner capacity and gains in inventory status in the United States. Again, if a slowdown does occur, industries who use number two oils will not need it and distillates may increase because of less tractor trailer use.

Impact of jet fuels on the winter heating mix
“While our winter heating mix contains 75 per cent jet fuel to #2 mix and, as of today those prices remain strong being almost a nickel a litre higher in value against last years numbers. I would have hoped that the drop in airline usage would have impacted that, but to no avail. Again, we have to see increases in inventories to impact the price and that simply isn’t happening.

Consumers and governments face the reality
“Consumers will have to take a long, hard look at the type of heating system they use at their homes. Heating oil usage has been measured at a historic low in the United States and has declined in use to only 7 per cent of the northeast population, the majority of the population of which have already made the switch back to either natural gas or electricity. It may be costly to do so but, there may be some worth in the consumer investigating the switch and cost-effectiveness of such a conversion. It may simply be a case of where heating and stove oils have become redundant means of heating even though there is still a consumer need.

“Government is looking at the rebate program in Newfoundland and Labrador but there has been no word yet on the program or what it entails. To add to that, the federal government needs to actively pursue their involvement in the rebate program on a national basis as they are chief beneficiaries to any taxes collected on heat. While a conversion to other forms of heating is expensive to consumers, government may also be forced to look at helping out consumers with the costs of conversion along with possible home retrofit-type programs to help consumers save.”

-30-


For more information, contact;

George Murphy
Group researcher/member
Consumer Group for Fair Gas Prices

Highway robbery

Well...

In areas of the country that got hit with upwards of a 13 cent a litre increase, there are a lot of people thinking that this is a case of highway robbery...

They'd probably be right in this case...

Hurricane Ike may be blowing ashore and having it's effects on New York harbour pricing that we're seeing hit us right now, but, are the traders right in pushing pricing up?

Doubtful, and here's why...

Back at the time of the Katrina and Rita hurricanes during the Labor day week of 2005, consumers saw gasoline pricing increase while still in the demand season for gasoline and while, at a time when refiner capacity was measured well above todays 78 per cent...

Memory is failing me but I do believe that capacity was measured somewhere around 92 per cent. That number alone tells you that there is more than enough extra capacity to take over where any disruption might be occuring, or will occur after this weekend when the damage assessments are done.

Here's the big second notion; Consumer demand is lower now than what it was back then. We're presently down 5 per cent from the same time last year. While inventories may be down from last year they're not described as "critical".

What gives Big Oil?

I think it's high time we in Canada start to look after ourselves and trade based on a Canadian condition and not where Uncle Sam thinks pricing should be...

Thoughts?...

In the meantime, a caller to a local Open Line radio show here told the host that while he was at a local gas station here, the station owner told him his cost for purchase had already shot up close to 11 cents a litre. That's before taxes...

Number I have here is 10.2 cents plus...

Be warned!...It's coming!...

Regards,

George

Stove and heating to take a beating…
Numbers show possible increase coming to heating and stove oils

Media release

Conception Bay South, NL, May 28, 2008- Consumers in Newfoundland and Labrador can expect to see a possible increase to heating and stove oils this Thursday as numbers seem to show that the Petroleum Pricing Office may have to use the interrupter formula.

“Six days of a possible seven days data shows a possible upwards movement of 4.4 cents a litre, just 4/10ths over the requirement for the use of the interrupter formula. I don’t believe that, in spite of the drop in oil yesterday, that distillate prices dropped enough to prevent the use of the formula so, it looks like consumers here may be hit,” said George Murphy, of the Consumer Group for Fair Gas Prices.

“Gasoline numbers are showing an added 3.5 cents a litre, not inclusive of taxes, so, according to the rules, that fuel is not susceptible to a price change tonite. However, I will be going to the pumps in case their numbers were a little more volatile than my own in this case. It’s only by a half cent and I really need that last days data to make the more accurate prediction. That day’s data won’t be available to me until after Thursday’s price move- IF it happens. I’d rather err on the side of caution personally. In the event there is no move in pricing on Thursday then consumers will most likely get tagged next Thursday at the regular price change time.

" What should sicken people is the simple fact that, if this price change holds true, it will be happening at a time when the trend traditionally shows downwards in the summer non-demand season for heating and stove oils. People should realy be worried over their heating expenses this coming winter if this keeps up. Heavy investment is beginning to lead to a collapse in the need for heating and stove oil product. Investment is actually going to kill the distillate market by making this product unaffordable to most consumers in North America. Are they pricing Canadian and US consumers out just to send the product overseas to the more lucritive European and Aian markets?

"Are we easterners going to be left freezing in the dark?

“Continued heavy demand by investors in commodities like gasoline and distillates again are playing heavy into the markets this past week and there was some added pressure on gasoline as well with the final run-up to the US Memorial Day holiday. What we keep hearing out there is the fact that all this high price jargon continues to make for an artificially-supported price and there is simply no justification in numbers that we see here that they should be this high. This is a bubble that is soon to break and bring investors to the short end of the stick. At least, here's hoping!”

-30-

For more information, contact;

George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices My email: gasprices@hotmail.com

New data still shows increases to heating and stove oils

Gasoline to drop...

I have some new data to share with you all in the province...Follows from yesterdays post.

New numbers here are still showing an increase coming to heating oil prices as well as those for stove oils, this time for twelve days show an allowable of 1.86 cents per litre. That could mean a possible high selling price of 98.02 cents per litre for heating-stove oils in this area!

Unbelievable!...

Initial projections at the start of the fall season showed numbers anywhere between 85 and 95 cents with a buck a litre possible...

Gasoline shows downwards at 1.9 cents in spite of the record trading price for crude oil. I think that what this shows is that this commodity has been stretched to its limit when it comes to being a toll worthy of investment rather than the US greenback. I think that what we see is the law of diminishing returns kicking in here-you can raise the price but you will still sell less product to make the same revenues...

As a sidenote?...

Nice to see M.J Ervin revise the summer forecast for gasoline pricing but his numbers are still a little too high. He's forecasting summertime prices of $1.20 a litre in the metro areas-I presume he's talking Toronto- with possible spikes of $1.50 in more rural areas.

I feel like we're all caught in a "bid-ask" scenario at times with the Calgary company part of the "ask" side...lol

My models are still showing anywhere between $1.22 and $1.37 a litre for gas in the immediate St.John's area and with my most recent model showing $1.28 a litre at peak.That means that Toronto and it's environs could see anywhere around what they are experiencing right now, around the $1.08 figure...

Keep in mind that this does not include panic scenarios to the markets like-you heard from me first-"Hurricane Syndrome". Otherwise, that could mean spikes to newfound territory in pricing again.

I'm still taking bets that investors are soon going to realise that they can't drive up the price of commodities anymore than what they fel the consumer is willing to pay and that's why, when you mix recesion into the equation, that we'll soon see a "profit-taking selloff" in crude oil.

Hold off on buying any more heating oils for now, if you can do it. My bets are that this is the last of the increases and we'll soon be witness to a slide in heating-stove oil spot pricing.

Any comments, drop me a note or leave one here...

Regards,

George Murphy

Consumer Group for Fair Gas Prices

gasprices@hotmail.com

The ramifications of $100 a barrel oil
Consumers and industry will take a huge hit

News release

St. John’s, NL, September 19, 2007 – Rising oil prices will have detrimental effects on consumers and industry if oil prices hit the $100 per barrel mark by the New Year, that’s according to George Murphy of the Consumer Group for Fair Gas prices.

“Already, I am noticing that heating oil pricing is 10 cents a litre higher than the same point last year and that could prove to be very costly to consumers this coming winter as pricing has continued to rise along with the price of a barrel of oil,” said Murphy. “If you haven’t heard of unaffordable heating oil pricing, it’s because we haven’t gotten into the winter heating season quite yet.”

“Spot pricing for all distillate fuels is up considerably and that could lead to higher transportation costs as we get further into the distillate season. We could become witness to increases in fuel costs to move goods and services and that means inflationary pricing to the average consumer. Market analysts are already predicting only a slight retreat in oil prices before we see $100 a barrel for oil. The oil industry will try to recoup those costs and that will mean higher pricing for all refined products including heating, stove, diesel and gasoline pricing.

“The only thing that is preventing a very sharp increase in pricing instead of the moderate increases we have been experiencing is the rise of the Canadian dollar against its US counterpart. If this were two years ago, we’d be looking at an added 25 cents onto these prices as they stand now. The ramifications of any slip in the Canadian dollar now are stark and staring at the consumer and industry too. A dollar a litre for heating fuel would be disastrous to the consumer out there.

“Government, on both levels, is going to have to look at a complete removal of the tax on heat as a measure to keep consumers warm this winter. I don’t think it’s good enough to see rebate programs put in place to take care of just a few people. We all are going to have to pick up the rising costs for higher oil so, why not make it across the board and country-wide?. Rising oil pricing may be good for the government treasury but when do we get our share?

“The fact that there may be consumers out there who will not be able to afford heating fuels this winter is fast becoming both a growing health concern and a financial burden to a lot of families. Industry, particularly the transportation sectors and the Newfoundland and Labrador fishery, will have to be able to adapt and deal with rising fuel costs as well as high dollar value and transportation issues. The rising costs of oil to electrical companies that generate electricity by burning oil will also have to recoup costs from the consumer as well. What are the side-effects of that on the people of Labrador?

“It’s still a little early to predict where this winters heating/stove oil season will be going this year but, so far, it does not look good. With pricing for heating oils already ten cents a litre higher than the same time last year and the promise of a rising oil price, the ramifications are obvious. In spite of recent builds in distillate inventories ahead of refinery maintenance season, there is a distinct possibility this time around that we could see pricing well over last years numbers. The only thing that could stop what will happen is recession and, I’m thinking we’re close to the edge of that now.”

-30-

For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

gasprices@hotmail.com

Something wicked this trading day comes

Guess what?..

While you slept last night, a concerted effort to increase spot pricing for gasoline occurred in the markets. Gasoline spots increased by more than 20 cents a US gallon.

That's about 5.5 cents a litre to Canadian consumers translated at the pumps.

Yes...Hurricane Syndrome has set in and there's not a darn thing to be done about it on this side of the border.

Consumers should now be aware that we have entered that "revered" time of the year where corporate rape of consumers occurs on a whim. Data from the National Hurricane Center in the US indicates today that tropical depression number four, soon to be named Dean if it reaches hurricane status, will likely become a tropical storm later today.

Consumers would be advised to keep the tanks filed up but practise conservation methods while these storms are around. When an actual storm is more than likely to damage any oil production or refining facility, the consumer is better off waiting the economic storm out and go with what they already have in the tank. Hoarding the stuff only caused undue grief to other consumers and sucessfully drives up the price of gasoline and someone besides youmakes a fortune.

So, while these storms are around this hurricane season, take some of this practcal advice and help take a financial bite out of the people who like to take a financial bite out of you. If a storm hits, you should have had full tanks already. Buying after the storm hits only puts bigger dollars out in the other fella's pockets.

Regards,

George Murphy

Prices to drop slightly...

Nothing to get excited over when "supply and demand" are manipulated

Looks like consumers in Newfoundland and Labrador will see some kind of relief, but it's nothing to get excited over...

Gasoline should drop by something in the order of 6/10ths of a cent while stove oils should drop somewhere in the order of 3/4 of a cent on a litre.

Continuing draws against inventories, consumer demand are among the factors. Look as well to Nigeria, Iraq, Iran and the list goes on...

Look at refiner capacity though, when you think about draws on inventory. I look at those numbers from the Energy Information Administration on a regular basis and what they see is not what is reported to the consumer in such a way as to be understood.

There is a "fine line"...

See...It's like this. When I see that refiner capacity is down and I see that the consumer is drawing on present refined inventory, it's only normal to assume that pricing on any product will go up. In this case, I think that Big Oil knows that and plays with "capacity" on a regular basis.

Why wouldn't they?...

If you knew that everyone would pay more for a product if you slowed down production, wouldn't you slow production? That means you could save on labour, electrical costs and, in general improve on your bottom line-your shareholders would love you for it.

You know that the world is thirsty and you know that you have what they want. If you can hide behind the excuse of "maintenance" then why not? Seems like refinery maintenance takes longer than it used to. It's been several weeks now and no great increase in "capacity".

Either way we look at it, the rules of "supply and demand" have been successfully manipulated and there's no Competition Act in Canada to protect the consumer from that.

Regards!

George

Letter to Natural Resources minister of Canada, Gary Lunn

Here's a copy of the letter I sent to Natural Resources Minister, Gary Lunn the other day. I figured i would list this one as a matter of interest to consumers in Canada and the United States.

Feel free to leave a comment...

Mr. Gary Lunn March 05, 2007
Minister of Natural Resources
Government of Canada
House of Commons
Ottawa, Ont.
K1A 0A6


Dear Mr. Lunn,

I am writing to you in the hope of expressing concern for the ongoing shortage of gasoline and related commodities and, in the hope I may be able to share my years of research with a small synopsis of the situation as well as possible solutions.

I also hope to share some possible solutions to the problem in the hope the Government of Canada may formulate policy to avoid such troubles in the future, as well as have the present problem solved. I have some nine years experience in learning about the workings of the oil companies as well as becoming quite knowledgeable on all aspects of how pricing to the consumer is performed.

As you well know by now, the Imperial Oil Nanticoke refinery in Ontario suffered a fire which drew Imperial’s refinery capacity out of an already stressed marketplace. That, in turn, has helped work pricing up on a consumer level that some find unbearable and others, like tourism industries, are showing concern for the summer season.

High prices, as we well know, not only hinder the economics of the country, they hurt the spending of the Canadian consumer. They show restraint and that’s not good for business in the country. Consumers want to know that there is “fairness’ in the marketplace and not an edge to one group or the other. We recognize the right of business to make a profit on an even playing field as well as recognize the need for petroleum-based product that the rest of the country may require in the future.

The problem that the Imperial Oil refinery closure caused was the straw that, effectively, broke the consumers back and it was a rude awakening to the capacity problem that the consumer faces in this country. While we lost a refinery in central Canada, prices have been affected in all reaches of the country and on world and North American markets.


While it wasn’t the only accident we saw in North America over the past couple of months, it was enough to add some stress to an already stressed price on the markets for refined gasoline product. This is the highest wintertime gasoline spot price I have recorded since first taking stock of price trends and the highest starting point for prices leading up to the summer driving season.

The writing is, effectively, on the wall for high pricing this season barring any unusual circumstance like economic collapse or very strong inventory builds.

What this refinery shutdown tells me are several things that I hope government will consider for future policy. These suggestions may seem to be controversial and will probably be susceptible to others who know slightly different. A lot of these suggestions will also work in the long term because they become the impetus by which consumers and industry get to both build, and conserve.

Here are several suggestions of which I hope you can consider:

The lessons of the shortages in gasoline have told us that this country has no grip on how much Canada consumes as a country. It also tells the consumer that we consume beyond our means and are only limited by how much Canada can produce. Bearing that in mind, the Government of Canada should immediately take steps to create Canada’s own “Energy Information Administration” that includes:

Mandatory reporting and publishing of available refined product by type.
Mandatory reporting and publishing of crude oil data and inventory.
A weekly summary of crude supplied to the markets.
Numbers to substantiate crude oil exports.
Numbers showing refined product exports by country and quantity.
Numbers that show available Canadian refinery capacity.
Numbers that show available refined inventory data by area of the country.
Show data for all petroleum products used in the country including natural gas.
Include daily postings via the Internet of cash petroleum pricing of all petroleum products.

These are just a few ideas for this new branch of the Natural Resources department should entail.

What effectively happens is that the country becomes more aware of what it consumes and the traders on the New York Mercantile Exchange and others, become sensitive to the availability of Canadian supplies of petroleum and related products. If Canada has ample inventories of product that is supplied to protect Canadian consumers’ needs, and there is extra on hand, then these refined products can become a wedge to drive prices down on the markets. Traders speculate on available inventory in Canada as well as their own market.



It would not be likely that, should Canadians see inventory of product in Canada protected for the interests of Canada and Canadian business, pricing would rise or be excessive to the consumer. If they saw on a weekly basis that inventories of product were dropping, and that pricing may be affected on the interim on the markets, they would be more likely to save and practice conservation to prevent any increase in product pricing. Mandatory reporting on the part of the oil companies in Canada, along with data gathering by personnel of the Natural Resources department, will also help oil companies gauge what and how much to produce from month to month. This has an immediate impact of saving a refinery’s energy and helping keep Canada’s environment a little cleaner.

Industry, particularly those that use heating oils and natural gas, will likely be able to track pricing and available petroleum inventory and make judgmental decisions on what type of heating fuels to use on a yearly basis as industry does in the United States. They make decisions on what type of fuel to use based on long term costs to their factories.

In closing, the government of Canada also has to put in place a mandatory moratorium on any further closures of refineries in Canada until it can figure out how much Canadians are consuming versus the refined product that is produced in this country and available to the Canadian consumer. Nothing else is asked of this country besides looking after the consumer environment as well as his or her future needs as well as those of Canadian industry. Ironically, it was a closure of the last refinery within Canada that may have put the industry itself on a tenuous road to problems for the consumer, that refinery having closed in Sarnia, Ontario just within the last two years.

The Government of Canada must take the steps to recognize its own citizen’s needs as well as those of future consumers of petroleum products. It also has the duty to protect as much of the resource as those citizens will need in the future. That responsibility should include environment concerns balanced with the needs of Canadians first and it has to become the lever against traders in the U.S marketplace.

These thoughts are also available in a report I made to the Standing Committee on Gasoline Pricing in Canada some years ago. If you desire a copy of that report, please let me know and I will forward a copy to you via mail or via email.


With best regards,

George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices