The numbers so far this week...

Don't look for any changes in prices this week, that's if the markets still show "steady as she goes" in tomorrow's trading...

A shaky economic recovery added some downwards pressure and then the debt deal in the US added an up side, negating any possible decreases, let alone increases, to consumers this week so far.

Here's what I have for the price changes this Thursday, with one more day to go:

• Heating and stove oils show down by 19/100ths of a cent.
• Diesel shows down by 6/10ths, and...
• Gasoline shows an even zero to come.

I'll be back tomorrow night with a full breakdown.

Shortages in Nova Scotia

In the meantime, a shortage of regular gasoline in Nova Scotia has some wondering what's happening with prices this week.

The short answer is "nothing so far".

Gasoline prices there are measured the same way as they are here, by NYMEX pricing, and those numbers show no change, like I said. It's a good case for having regulation of fuel prices, to prevent any binge pricing from entering the markets.

The shortage of gasoline is caused by a refinery outage by an Ultramar refinery that was shut down earlier than anticipated by a lightning storm. Power outages, or hits, could cause a refinery to have to take up to a week to restart, but a planned maintenance outage played into the plans as well, and all before supplies could be purchased from elsewhere.
See the CBC story on the shortages here or see it at www.cbc.ca/ns

Ultramar is trying to top up supplies via a New Brunswick refinery through a 'reciprocal sales agreement, a type of agreement that our group considers contrary to the rules of free and open competition. In essence, refineries choose to close up refineries and share from other company's supplies, negating competition between companies.

When the Competition Bureau allowed an agreement we contested in 1998, they told us it was too late to stop it, and the arrangement between companies was allowed to continue.

Just another reason for a new Competition Act and a Bureau that won't be afraid to intervene on the behalf of consumers in this country...

That's it for now!

See you tomorrow evening!

George

Oil remains elevated

An increase coming for gasoline prices

Media release

Conception Bay South, NL, March 29, 2011- It's not often that George Murphy's numbers are wrong, but he's hoping that they are this time. Numbers are showing that consumers could see an additional 2.6 cents a litre up on gasoline prices for this week when the PUB adjusts prices this coming Thursday.

"Oil prices remained elevated this week after last week's modest retreat, gaining almost three bucks a barrel US, hitting a new record high since September of '08. We're right back to where we left off with gasoline prices edging upwards and heating oils remaining unaffordable to most. Something has to give. Consumers are going to have to start to let their wallets do the talking." Murphy said.

"Numbers show just a 9/100ths of a cent drop to heating and stove oils, a 4/10ths of a cent drop to diesel prices and a 2.6 cent a litre increase on the way for gasoline. The troubling thing about all this is that, after last weeks data, there was still a demand for gasoline and that helped support the high price. In spite of the rising price, inventories of gasoline continue to drop.

"Heating and stove oils are still showing signs that prices will not be coming down anytime soon. With oil prices up again because of demand and the world geo-political situation, I expect that they will remain high for some time to come. The provincial treasury will continue to reap the benefits of that while consumers will have to collectively start to impact inventories and demand itself. Right now, unless we see economic collapse or more banking problems out of the European Union, we're probably not going to see any relief in the interim".

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For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

So, where are prices going from here?

It's a nice summer morning here in St. John's, especially nicer after hearing the news that fuel prices are down; and a lot of questions from people asking if the downwards trend will continue...

Here's hoping! The evidence is certainly pointing towards "steady as she goes" and also "down" in the best of scenarios. If I were an oil trader, I think I would quit, let's put it that way.

Right now, the news is not good if you are an oil man. With waning consumer demand for gasoline and another build in inventories this week, it's hard to wonder why there should be any price increase in the foreseeable future. The fact that North American drivers just aren't buying to the same degree that a lower price should dictate, should be a forewarning to most of the change that drivers are facing. Consumers are not cutting back on consumption because of price, they are doing it out of necessity that the economic situation is bringing to them. Prices for gasoline are now about 35 per cent lower than the same time period last year, yet demand, is recorded at a mere 6/10ths of a percentage point above last years numbers.

Consumers can't spend because of the uncertainty of the ongoing economic recession. I like to call this "enforced conservation" a new economic term you'll soon be hearing about in your favorite business news network or late night TV host!

Enter the ongoing prospect of an oil glut in the markets. While the data from the US Energy Information Administration showed a draw on US inventory, the same still shows a huge 47 million barrel surplus in stock in holding tanks that should be heavily drawn upon during summer months of the past. The word from OPEC is that they produced some 57,000 barrels per day more than their own self-imposed quotas during the month of June and this is only now coming into the North American inventory grid. Talks are abounding of $45 a barrel US oil in August, not heard for a long time during peak summer driving season. Some experts like Philip Verlager are even predicting $20 US a barrel oil and an imminent collapse in prices this winter at best.

Also adding to the downwards pressure on gasoline pricing in the coming weeks is a pick-up in US refinery capacity, up again this week to almost 88 per cent. With added capacity and waning demand, why would I as a trader even bother investing? There's no return here.

The only possibility of upwards pressure on oil will have to come from here but, right now, it's showing just like a St. John's July 16th morning : Nothing but clear skies!

The trend of falling prices might be around for a while. The news from the Alberta oil fields won't be all good if that's the case.

Hope this answers a few questions out there?

Regards,

George

Slight changes coming for fuel prices
Gas is up a little, distillates showing down

Media release

Conception Bay South, NL, April 21, 2009- Consumers won’t see too many changes in fuel pricing when they are set this coming Thursday morning by the Public Utilities Board, that’s according to George Murphy of the Consumer Group for Fair Gas Prices.

What consumers will see this week
“Numbers haven’t changed a great deal over the past two weeks. The markets are at an impasse as it weighs demand against bad economic news. It’s almost like everyone is waiting for something to happen and nothing is”, said Murphy, researcher for the consumer group. Gasoline shows an added 8/10ths of a cent up while the distillates are down. Stove oils are down by 1.26 cents a litre and that could be the way of heating oils. Diesel is also set to drop by 1.2 cents.

Watching Marine Atlantic
“I’m keeping a close eye to the marine fuel numbers as they come in. They are now hanging close to where they were back in 2005, which was the year previous to any added surcharges on passenger fares. With the drop in distillate demand in recent months, it’s going to be interesting to see what Marine Atlantic will do even though we still have to go through another two months of market trading before they come to a decision on adding fuel surcharges once again. In the near term, I don’t feel there will be an increase forth-coming in June as the bad economic news does not provide that upwards pressure to pricing.

Focus off distillates
“Consumers should expect to see a gradual decline in stove, diesel and heating oil prices for the next few weeks. Diesel, an important transportation fuel, will still be susceptible to some chance of upward movement, particularly if refiners continue to cut back on capacity. We have more to fear from inventory draw-downs on gasoline that will help stabilize the price, if not increase gasoline prices slightly in the weeks leading up to the US Memorial Day holiday. We’ll be able to make a summertime prediction on peak gasoline prices by then.

OPEC to meet again
“OPEC has set its next meeting for May 28, 2009 in Vienna. The group will meet again to discuss the current economic situation and talk about the possibility of further cuts to production. It may all be for naught. Figures from the International Energy Agency show that OPEC compliance with its own self-imposed quota has been weak as of late. The group produced almost 770,000 barrels a day more than its 4.2 million barrel cut over the last year. The numbers are even more telling when last weeks report from the US Energy Information Administration reported a good build in crude oil inventory alongside draw-downs of refined products. We could be on the verge of another collapse in crude oil prices if we see more increases in crude oil inventory and continuing weak compliance with quotas.”

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For more information, contact;

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

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.”

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For more information, contact;

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

Consumers to get another break at the pumps
Numbers show interruption to gasoline

Media release

Conception Bay South, NL, November 11, 2008- Consumers in Newfoundland and Labrador should see another break at the pumps this coming Thursday that should bring prices under a buck a litre in most areas of the province, that’s according to George Murphy of the Consumer Group for Fair Gas prices.

“Oil has continued to trade down and that has also been reflected in lower commodity prices, especially for gasoline in the face of weakening demand for the product. Continuing bad economic news and good inventory builds has played into the numbers and that means that gasoline consumers should see a drop of approximately 4.7 cents a litre at the pumps this Thursday morning, if the numbers are right.

“Stove oils and diesels continue to show drops of almost 3.0 and 3.6 cents a litre respectively but it is harder to predict the heating oil numbers with the advent of the winter heating oil mix. A drop is possible there though, in the light of the drops in the market. Consumers should take a ‘wait and see’ approach and gear their purchases after this Thursday accordingly.

“It’s been well over two years since the last time consumers have seen 97 cents a litre in the immediate St. John’s area and it should come as welcome news, should it come to be realized. Just because we are going to see prices drop below a buck a litre doesn’t mean that consumers are good to buy as much as possible however. Consumers should still conserve as much as possible as any consumption can have the opposite effect and help to support pricing rather than see a continuing slide in prices.

OPEC cuts not deep enough?
“Look for OPEC to cut further into their self-imposed production cuts this coming December as oil prices have continued to slide. I expect OPEC to step in and further deepen their cuts by at least 750,000 barrels at their next meeting. That would probably be enough to support pricing at its current level amidst the latest round of bad economic news this past week. OPEC will attempt to put restraint on output and try to influence world pricing.

Government should extend wood pellet rebate program
‘While government has introduced a wood pellet stove rebate program, government should extend the program to include new and advanced technology woodstoves that have become more fuel efficient over the last ten years. Most wood stoves have been improved in recent years that burn wood fuel longer than previously. We also have a small wood supply industry here that is sustainable and we need to provide the incentive to consumers to improve their energy efficiency by providing funding for energy efficient wood stoves. Just because it may be a new industry doesn’t mean that it should be given “carte blanche’ to the wood fuel market. Competition helps to keep pricing down to the consumer and we need to see some of the older technology wood stoves removed to conserve on wood resources as well.

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For more information, contact;

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

On the tail end of last week...
Consumer pricing to drop again

Media release

Conception Bay South, NL, July 29, 2008- Consumers in Newfoundland and Labrador will again see some drops in most petroleum pricing, all this coming on the tail-end of market activity last week.

What consumers will see
“With five days of seven days data needed, consumers will see close to 2.8 cents a litre down on gasoline while heating and stove oils will drop by close to 4.1 cents a litre. The heating-stove oil number may also be an indicator of where diesel pricing may be going as well which will be welcome to the transportation and fishing industries in the province. They’ve been waiting for a long time to see pricing come down.

Cold comfort in the heating-stove oil numbers
“Heating and stove oil numbers have come down in recent days but there is still a long way to come down just to reach year-ago levels. Heating oils will still be 37 cents a litre higher than the same time last year and that’s with this weeks projected drop in pricing included. If we don’t see a concerted drop in oil and related refined commodity pricing, then there is big trouble ahead this winter for consumers. It may be hot outside now but the numbers are providing cold comfort for consumers when looking at last years numbers. There’s still nothing here for consumers to be happy about in spite of recent drops in pricing.

What will oil do in the next little while
“OPEC production is picking up in spite of a drop in demand in recent weeks and that figures heavily this week as we see the numbers change in the consumers favour again. OPEC member Saudi Arabia was responsible for some increase in available crude oil on the markets as the OPEC country promised an added 300,000 barrel increase in June and added another 200,000 starting this July. That second oil increase will make its play in the markets shortly and we’ll see a small move back to the US dollar as an investment rather than commodities-at least for the time being. That may mean some slight relief to come for consumers as both demand and inflation weigh in on overall consumption and the high price of oil plays as a mitigating factor in consumer purchases.

Other factors remain in play
“Consumers still have to be on guard for other conditions that remain in play in the markets. We still have the promise of world geo-political situations like Nigeria and the Middle East and Iran that can show their ugly head at any time as Nigeria did in yesterdays market play. We still have Hurricane Syndrome playing in the markets as well with the markets playing with weather conditions and possible supply and refining disruptions in the Gulf of Mexico. Traders will use anything right now, to help support oil pricing rather than see a decrease caused by market actualities in the future.”

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For more information, contact;

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

Interruption possible for all fuels
Recent market activity warrants the use of interrupter formula

Media release

Conception Bay South, NL, July 22, 2008 – Consumers in Newfoundland and Labrador can expect to see the use of the Petroleum Pricing Office’s interruption formula this week as all numbers are showing that gasoline and heating-stove oils have met the criteria required.

“Consumers can expect to see the use of the formula for gasoline as well as for heating and stove oils. I also expect that diesel will also fall under the criteria based simply on the most recent market activities. When oil pricing loses as much as it did last week, then you also expect for the related refined commodity to do the same,” said George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

“With five of seven days data at hand, I have gasoline to drop by 9.9 cents a litre and heating-stove oils to drop by 7.7 cents a litre. Initial numbers showed a 9 and 6 scenario was the more likely based on the first two days data. The heating oil number may be a good indicator of where diesel may be going as well. We now have five days and that’s why the numbers have changed. I expect there to be little change when the other two days data become available.

“Markets for oil traded down based on the troubles the markets are seeing with the world economy right now. We’re facing economic slowdown, a drop in consumer demand overall and that has led to some tidy gains in oil and commodity inventories. The previous fears of an economic blockade against Iran and it’s pursuit of a nuclear program abated somewhat and the possible supply disruption scenario from that area was gone from the traders basis for the elevated price. Hence, the consumer will see some relief in pricing this week.

“We know that high pricing has become an undue hardship for a lot of people and we’ve written a note to the Public Utilities Board asking them to pass these substantial savings on to the consumer in this province ahead of the ‘scheduled’ interruption price change to consumers. We want these savings passed to consumers for Tuesday midnight instead of the Thursday implementation just to bring emergency relief to consumers out there. Based on the performance of the dropping price in other markets, I think we should like to see something happen here sooner rather than later.

“Right now, some markets have seen corresponding drops in numbers where there is still competition in the areas involved. Some areas of Toronto have seen pricing drop by as much as what I have on paper for this area now. We need to see some redress to consumers and being as extraordinary situation as we’ve seen in the markets since last Tuesday; I feel that the consumer in Newfoundland and Labrador deserves to see the break early.”

-30-

For more information, contact;

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

By the way, be sure and leave any comments you might have. They all help... whether constructive...or not...lol

What goes up...

Must come down...

I know...

This increase surprised me a little too...

I just didn't know anything about retailers looking for the added 1.25 cents on their margins, not that they didn't deserve it now mind you. What makes me sick about it is that the 'majors' will get it too, as far as I know.

All in all, my numbers in the end allowed for an added 7/10ths of a cent a litre (with my margin of error of 3/10ths of a cent) on gasoline and I also had 2.9 down on heating and stove oils. It was that extra 1.25 added that put the screws to my numbers this time.

Here's what I wanted to let you all in on though...

I've been getting a lot of emails on why our prices haven't come down the same as other jurisdictions and I do have an answer for everyone on that...

Hold off as much as you can until next Thursday, the 24th...

Here's why...

Our regulatory system uses what I like to call a "passive" system of regulation; that is, it waits for events to happen in the markets for a two week period and then reacts to what has occurred during that two weeks of business. Prices that were set this morning were set based on the timeframe of July 2nd and July 15th, from a Wednesday to a Tuesday.

Tuesday was when we saw oil first take it's precipitous dip down, if you remember...

The problem here was exactly that; that prices didn't dip for oil until that last day of the regulatory period. Call it bad luck, but other markets including the immediate Toronto markets, saw prices for gasoline hit $1.40 for the same timeframe which is not unusual for what we saw in crude oil prices.

Our prices never moved during the same time...

Here's where we might see something happen the other way however...

The fall in crude oil prices continues, so much so, that my numbres are already showing the likelihood of a interruption scenario taking shape, only this time DOWN in price. With only the first day of the regulatory period on record, already I'm showing dowjn on gasoline by near eight cents a litre and heating/stove oils down by nearly the same.

I'll be cautious on this one though...

Anything can happen in the markets that might see a complete and utter reversal of what Tuesday saw in the markets and the whole interrupt scenario might be thrown to the wind. I'm holding back on my purchases in the meantime in the hopes that we might see something in the offing next week.

You might want to do the same...

Reagrds,

George Murphy

Gasoline prices to remain steady-Heating and stove oils to drop

Media release

Conception Bay South, NL, July 15, 2008- Consumers of gasoline in Newfoundland and Labrador shouldn’t see much change in gasoline prices this week when the Petroleum Pricing Office sets prices again, that’s according to George Murphy of the Consumer Group for Fair Gas Prices.

What the numbers say
“From the looks of things, gasoline prices may show no change according to the first twelve days of data and today’s market activities. Right now, those numbers are showing almost a ‘break even’ scenario. The numbers are slightly different on the heating oil front. Numbers there are showing an almost 1.5 cent a litre decline and that doesn’t include the market sell-off of distillates we’re witnessing right now. Heating and stove oils may drop more than what we have on paper right now,” said Murphy.

“I would expect the heating oil numbers to be the same for stove oils and that should also reflect a very modest decline in diesel prices. How long will the slight retreat in pricing last would be anyone’s guess at this juncture. We already see a possible winter record for heating and stove oil pricing barring any economic collapse and drop in distillate demand. Today the markets are reflecting the stark reality that we’ve seen all along; that consumers are hurting because of high petroleum pricing. Now that various economies failed to react to the rising costs of oil, we’re seeing deeper economic impact and the likelihood of recession. Because of that, there’s a drop in pricing today because of the fears of a drop in petroleum demand. What traders have sown, the economy can reap.

Not out of the woods yet
“Waiting in the wings are other possible factors that could increase pricing again. We are, of course, into Hurricane Syndrome season and that means possible plays in the markets that reflect possible supply disruptions or disruptions to imports. We remember well Katrina and Rita in September ’05. Venezuela also is promising to cut off supply of crude oil to the United States if Exxon Mobil is successful in freezing the assets of the national-owned Petroleos de Venezuela’s overseas assets. Other geo-political factors remain in play such as the ongoing disruptions in Nigeria, OPEC talk of possible production cuts in the face of a drop in world demand and, of course, consumer demand factors.

Last independent retailer to be sold?
There is some concern over the rumored sale of Tibb’s Oil in the immediate St. John’s heating oil market. I have received a couple of calls this week expressing the consumers concern over the possible sale of the area’s last independent retailer and the effect on the heating oil market if there are no independents left. This should be a concern to most after the recent sale of Forward’s Oil to Harvey’s Oil this past April. If wee see the sale of Tibb’s Oil to some other company, we will have seen the removal of the last independent heating oil retailers from the St. John’s market and that means some possible trouble to consumers of the product. I believe that there will be an adverse affect on the retail heating market in the area and that may lead to one company having a more than obvious dominant market position let alone the removal of competition in the market.
I think that, if the rumors were found to be true, then the Competition Bureau should be made to look at the situation and prevent the sale of the company to just that one retailer. It’s here that we need to stand on guard to protect consumers from any dominant market scenario. The problem here is that high heating oil prices themselves have become a factor in the independents demise. A lower sales volume because of an increasing price may well have been a factor in the sale, if it is true. I’m still trying to dig into this one.”

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For more information, contact;

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

Economic warfare 101

Oil is a funny thing...

Give it to one country when there is a high demand and you have the world's attention...

Such is the case of Iran today where oil again, is trading up on the news that Iran will "pull the trigger" if Israel attacks Iran's main nuclear facilities. As a result, there's also a promise of supply disruptions from the Middle east country that amounts to some 4.4 million barrels a day so, if the Israelis do attack the facilities at Natanz like they did at Osiraq in Iraq in 1981, we have a problem. Overall production will not be met by OPEC to cover the needs of an oil-thirsty world and prices will skyrocket because demand will not be met. Spare capacity cannot be met by the group.

A BIG problem...

It's like this. If Iran does disrupt production then we can thirst for heating oil a few dollars more. Gasoline prices will most likely reach unheard of levels.

The likelihood of an attack by the Israelis is good as they've done it before and with perfect execution. Without loss to themselves, Israel launched a daring raid against Iraq's nuclear research facilities by flying below radar over Jordan, the Iraq countryside and below radar defenses. The attacks that knocked out Iraqi facilities was over in less than a half hour and the Israeli air force flew back unscathed to home soil.

If yesterdays missile tests are any indication, expect to hear of a raid carried out by Israeli forces almost any day now. Israel will not sit lightly and wait for Iran to strike first. They've never been one to turn the cheek since Munich .

To tell you the truth, I couldn't blame them one bit.

I just can't stop thinking how much the Iranian government might be making on oil just because it is rattling sabres again, photo-shopped pictures and all.

Economic warfare.

Coming soon to a gas pump near you.

Keep the oil tank filled if you can...

Regards,

George

Heating and stove oils…

Interruption possible this week to heating and stove oil prices

Media release

Conception Bay South, NL, July 8, 2008- Consumers of heating and stove oils, and possibly diesel fuel, may see an increase in price this week that could be as much as 6.66 cents a litre. That would bring the maximum retail price in excess of $1.29 a litre for the St. John’s and immediate area.

“The numbers I have as measured for the first five days of this regulation period range in excess of six cents a litre. It remains to be seen if during Monday and Tuesday trading those prices backed down as much as oil did in order to avoid interruption. If they never, consumers could be looking at a new all-time record price for heating and stove oils, all at a time that puts the important heating product on life support”, said George Murphy, group researcher for the Consumer Group for Fair Gas Prices. “If they did, then we’re still looking at a possible increase to consumers coming next week. Gasoline will not face interruption to pricing this week. I guess you can say that ‘Pump Day’ is officially cancelled until next week”

“What should bother people is the fact that we’re now experiencing hot weather and that’s the time when traditionally, heating and stove oils have been known to crash but the alarming aspect here is that prices are moving in the opposite direction. Numbers here I worked up are showing that $1.40a litre heating and stove oil is a distinct possibility this winter unless we see a mass retreat in prices. Sad to say but there has to be evidence of heavy economic damage or large inventory builds in distillates before we see any retreat in heating and stove oil pricing.

“Diesel pricing may also be reflected in those numbers although I don’t expect to see as large an increase. Diesel may dodge the interruption process but, if it doesn’t, we’ll be looking at a larger burden being placed on our transportation and fishing industries. They need some sever help but, no one is listening. It might be 25 degrees outside today but there’s more than 25 degrees of separation between what the markets are doing and the actualities that we hear that the markets should be reacting on.

“What the investor doesn’t realize is the fact that, not only are small independent oil dealers being sucked dry by the loss of volume, but they are also destroying the need for heating and stove oils as primary heat sources. They’re forcing people to go to other sources of heat other than petroleum products. They are, in fact, setting themselves up to get burned and, at the same time, radically changing the home heating markets in such a short time..

“Last week it was a drawdown in crude inventory, as miniscule as it was, the ongoing world geo-political situation in Nigeria and more importantly, the Iran situation and their pursuit of a nuclear program and Israel’s promise of an attack against those facilities. Also mixed into the equation is the falling US dollar and investors continuing to hedge against commodities rather than the US greenback. What about the fundamentals like dropping demand?”

-30-

For more information, contact;

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

How it all worked out...

I guess by the time you all drop in on this note, you will have already heard where the numbers went; mostly up. I guess we dodged a bullet when gas didn't move as I thought it would, but how close was it in the end?

From my media friends at VOCM, I got details of the hit on heating and stove oils and, as it turns out, with seven days now reporting here, I was out by something in the order of 3/100ths of a cent. My final number aloowed for an increase of 7.71 cents. That means that the decrease we all got from the removal of "jet" from the summer mix, was eradicated in one stroke of the pen.

What's worse is that our fishers and transportation sectors got the perverbial kick in the teeth overnight with an allowable 9.2 cents a litre increase to diesel pricing. That's why I say in my releases whenever I talk about the heating/stove oil numbers that "the number may also be pointing the way that diesel will also be going", in this case, UP...

Gas was a little different as the volitility of the markets got to me on this fuel.In the end I had an allowable of 4.1 cents a litre, if you include taxation, or 3.6 without the tax component. The interrupter works on the basis of a four cent a litre movement up or down as measured over seven days.

I usually call my shot with five days reporting so everyone can be a step ahead, particularly when it comes to heating and stove oils and to give the media a chance to report and get the word out to everyone...

My margin for error is 3/10ths of a cent and, with the volitility I figured that I would get the word out on a chance increase in case I might be off just a little; in this case by that extra 1/10th of a cent that would have moved my numbers up to four cents even on gasoline. Guess I "missed it by that much".

Hence, we dodge a bullet for this week with pricing for gasoline still on track for a possible 3.6 cent a litre plus taxes increase coming for next week at the regular setting of prices.

I just hope no one was inconvenienced by my call on this one.

Oh well, it's off to bed and call Randy Simms in the morning!

Sometimes, a tenth of a cent can ruin you...lol

Regards,

George Murphy

Still no relief on the heating front
Heavy commodity investment still forcing prices upwards

News release

Conception Bay South, NL, April 08, 2008- Market conditions are still putting upwards pressure on petroleum commodities and that means ‘prices up’ for gasoline along with stove oils this week, that’s according to George Murphy of the Consumer Group for Fair Gas Prices.

“Continued heavy investment into commodities like heating, stove oils and gasoline is putting upwards pressure on those petroleum products as a hedge against the U.S dollar. We’re also dealing with a huge drop in refiner capacity as refiners turn their attentions towards gasoline as we get out of the winter heating season. All this means that consumers here in the province of Newfoundland and Labrador will likely see increases to all petroleum pricing again this week.

What consumers can expect
“All numbers are based on twelve days data out of a possible fourteen that is used to set pricing. It appears that gasoline will see the bigger increase. Numbers there show a possible 2.8 cent a litre hike at the pumps while stove oils will only see a 3/10ths of a cent hike in price. The stove oil number may be a sign that we’re near the peak in pricing for heating oils as well as investors and refiners turn their attention to gasoline for the run-up to the summer driving season. The actual that may occur with heating and stove oils could be higher with the other days of data unavailable yet, although I don’t think those numbers will be significant to radically change things at this point.

Warning for next winter
While pricing for heating and stove oils are both expected to back off from records in short order, those same numbers have to begin to show a substantive drop between now and the fall if we are to avoid any problems with consumers keeping themselves warm next winter. Right now, heating and stove oil pricing is a record 28 cents a litre higher than last year while gasoline is roughly 7 cents a litre higher for the same timeframe. I would advise government now rather than later, to get rebate and retrofit programs ready to catch those who will need it, and that could be everybody next year if pricing does not fall back to more affordable levels between now and the fall. A rebate of $300 to consumers just will not cut it next time if pricing does not decline.

Time for pressure on the federal government
While the provincial government came through with a rebate program this year, the federal government got off scott-free in aid to consumers of heating products. Why? It is now time for both governments to get together and remove all the taxation components on all forms of heat in this country. Both levels of government are making astronomical amounts of revenue on oil royalties and that should be returned to the Canadian consumer. The pressures put on all related heating commodities is complicated that much more by a tax on a necessity in this country and so far, that pricing outlook may be a bleak one for heating, stove oils and natural gas users next winter. The simple removal of all forms of taxation on all forms of heat would go a long way to providing some relief to consumers.

Early summer gasoline outlook
Market investors and refiners have turned their attention to gasoline as the heating oil season comes to an end. Continued investment in commodities ahead of a dropping U.S dollar, may be enough to keep the pressure up on pricing but our models are still showing a “market reluctance” to drive up pricing to consumers. Recession fears are absorbing some of the upwards pressures right now and, I don’t believe that consumers are getting hit with as big of increases as they could possibly be because of that. Bad economic news has resulted in a fear in the markets that energy could be hit sooner than other commodities like foodstuffs. Bearing that thought in mind, it appears that while we may experience some increases heading into the summer, they will not be as great as the $1.50 a litre predicted by some industry analysts out there. Our model still shows a minimum to maximum possible price of $1.22 to $1.37 at the summer peak in July and, even those numbers show the volatility of the markets. Just the difference between last year and this years spot petroleum numbers shows a $1.30 a litre at the pumps is “attainable” at this point.

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For more information, contact;

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

Heating-stove oils face upwards price interruption
No changes coming to gasoline

Media release

Conception Bay South, NL, March 18, 2008- Consumers of heating-stove oils and possibly diesel fuels will see an upwards spike in prices tomorrow night as numbers for those petroleum products have increased radically this past week. That means that the Petroleum Pricing Office will use its interrupter formula to increase those prices.

“Numbers we have for the first five days of this pricing session are indicative of where we’ll see heating-stove oils head this week. Numbers are showing an allowable of 7.1 cents a litre upwards over those first five days and numbers from the New York Mercantile Exchange continue to trade above the four cent allowable for interruption to occur for Monday and Tuesday. While those two days traded down, we’re still in interrupter territory. The actual increase at the end of the day will be greater than five cents a litre,” said George Murphy.

“Gasoline remains unaffected as those numbers have not seen the huge spikes in pricing on the markets like the distillate group of fuels that includes heating, stove, and jet fuels. That’s probably part reason why we saw some of the major airlines increase fuel surcharges the last few days, Air Canada being another to do it just this week.

“The markets remain volatile with investors forcing upwards the prices for related commodities even though we’re at the end of the heating season. We have record spot pricing for heating oil that ranges in the $3.20 a US gallon mark, a price not seen in the history of trading.

“It is simply unknown why investors and traders continue to invest heavily in a ‘winter’ product. We all know that people can no longer afford to pay in excess of a buck a litre for heating oil product but they soon will be paying that in the immediate St. John’s and Mt. Pearl areas. Two weeks ago, I wouldn’t have believed it to be possible. Traders and investors on the MYMEX are showing how irresponsible they are when they invest out of simple ‘desperation”. They have nothing else they can find to make money on in the face of a falling US dollar? The last thing I’d be investing in at this time where there is heavy talk of a recession is any kind of energy based on crude oil.

“Either way you look at it, Big Oil is not going to move any more product with prices moving up. What they have done is drive up the price to a level where heating oils as well as stove oils, are no longer affordable and they have successfully provided their own means of building inventory. People can no longer afford and therefore, cannot buy in the same quantity.”

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For more information, contact;

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

What's wrong with oil?

I was asked the other day what it is about oil that has attracted so many to invest in it rather than sink money into other things that one would consider "recession-proof".

Present investment in oil is a little disheartening to see to the average consumer but to play folly with my investment plan and put that money to risk on oil instead of other solid things, is a little suicidal in my belief. That's part of the problem that I have with the latest run-up in crude oil pricing for which the US dollar has taken the back seat...

I don't understand how simple rules of economics can be ignored and money invested in a product that will see some sort of decline in usage if the recession talk comes to fruition. If we are indeed, heading towards recession, jobs and energy usage are the first to feel the blow of any slowdown in economic activity. Then why is there such heavy investment in oil?

I've heard every excuse in the book as to the reasons why you and me are going to pay at the pumps for investors folly but, is that any reason to become a spark that will aid in causing a recession at the same time? When will the spark come that will "start" the slowdown on demand and cause pricing to slip again? If there is recession then high prices for crude oil and their related commodities will surely be the reason for it. That, and George Bush's entry into Iraq... 17 billion in the war now, and counting.Is there any other reason for it?

By the way...

I still have only eight days data out of a possible fourteen that still shows a slight drop in gasoline pricing (2.3 a litre) and a slight increase in heating-stove oil numbers (1.5 a litre). Both modest numbers on already high prices should also be a warning for the oil investor out there: you're already starting to deal with the laws of diminishing returns.

I'm betting my money on the inevitable decline in crude in the next few months if the trend of recession continues. I would suggest to you people who have unknowingly invested in oil through your pension palns to get in touch and ask questions about your investors "investment"...It is, after all, your money...

Get to the pumps before Thursday

Call your heating oil guy too...

I'll have more on this tomorrow around this time but, from the looks of things, Newfoundland and Labrador consumers will be taking a hit at the pumps and at the heating-stove oil truck level this coming Thursday, February 21st.

Numbers I have from the last adjustment just last week, show an average of 66.06 a litre for heating-stove oils and an average of 59.43 a litre for gasoline.

Trouble with this is that numbers after last Tuesdays set average are all well over those.Each fuel is showing in excess of four cents a litre up and, in some cases, more than the allowable needed to warrant interruption to current fuel pricing.

I'll have more in a posted news release on what you might expect to see tomorrow, but after Hugo Chavez's little tirade last week along with a reported refinery fire in Texas this morning and heavy investment in oil and related commodities over the past week, it was bound to happen.

What does this mean to summer pricing?

Gas is supposed to drop during the winter and the increase in heating-stove oils at this time of the year means that we'll have that much more to face dollar-wise next fall.

You just get the feeling that you're going to have less to spend over the next little while...

Some relief coming at the pumps
Nigeria and Venezuela situation stymies price drops

News release

St. John’s, NL, February 12, 2008- Consumers can expect to see some modest drops in pricing for some fuel products but they aren’t as great as what would have happened if the situation in South America didn’t have to blow in.

“Consumers in Newfoundland and Labrador can expect to see close to 2.0 cents a litre down on gasoline and a rough 1.3 cents a litre down on heating and stove oils this coming Thursday, that’s with twelve days data out of a possible fourteen days available at press time,” said George Murphy, group researcher with the Consumer Group for Fair Gas Prices.

“We were initially looking at something greater than 2.5 cents a litre down on gas with a larger than expected decrease up to Thursday of last week but the ongoing war of words between Hugo Chavez and the United States and an ensuing court case between Venezuela and Big Oil caused a huge increase in oil prices. That, in turn, drove up the related prices for their refined commodities.

“The Venezuelan president, Hugo Chavez, nationalized some major oil fields belonging to Exxon Mobil some time ago. Exxon Mobil has since moved to place a freeze on the assets of Venezuela’s state-owned oil company Petroleos de Venezuela’s overseas assets and Chavez has promised an economic war if the courts agree with the move. Chavez has promised to disrupt exports of crude to the United States, the fourth largest importer of Venezuelan oil products.

“It’s a unique problem that the markets face here. Most of the oil refineries that can refine Venezuelan products are situated in the United States. Chavez may just be trying to raise his own popularity at home but it’s a funny way of doing things. If he fails to export products and raise revenue for his country, he will have to curtail spending. Funny thing here also is that Venezuelan exports amounted to almost 1.75 million barrels per day of crude to the United States so he’s potentially forcing the United States to look elsewhere for more stable supplies of crude oil. There may be opportunities here for other major oil producers to capitalize on his actions. Either way, it’s a “Catch-22” and consumers will end up paying for his folly or his own people will.

“In the meantime, Nigerian exports continue to suffer in the face of an ongoing “civil war” in the area that has led to a disruption of almost 500,000 barrels of exports of crude oil to the west. The latest actions involved rebels attacking a Nigerian naval vessel that was performing escort for an oil company staff vessel. One sailor died in that attack.

“A full blow-up of violence in the major oil production region will have an adverse cost to consumers and to oil pricing. Oil prices have increased almost four dollars U.S a barrel since Thursday afternoon’s market close while spot prices for gasoline and heating/stove oils have increased along with it.

“We are still well above the numbers for last year for the same timeframe. Gasoline is now 11 cents above while heating/stove oils are 16 cents above year-ago levels. The implications of those numbers should be obvious.”

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For more information, contact;

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

Pricing continues to increase
Numbers show fuel prices increasing this Thursday

News release

St. John’s, NL, November 20, 2007- Fuel prices are set to increase to consumers this coming Thursday and the news may not get any better for the summer driving season, that’s if the numbers hold as they are. While consumers will suffer this winter keeping warm , they will also be hit keeping cool this coming summer.

“The news is not good as we head into winter. Record spot pricing is being reflected in the markets and that means consumers are going to be paying more for important petrol products for the foreseeable future,” said George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices. “There’s even the hint of bad news for the summer if the numbers keep up the way they have been on gasoline.”

Thursday price change
“With twelve days out of a possible fourteen to go on, we’re looking at 2.4 cents per litre up on stove oils and 3.0 cents up on gasoline for this coming Thursday. Heating oil numbers are now reflected by a 25/75 mix of heating and jet fuels. The heating number is showing 2.4 cents but, once again, 25 per cent of that is only used. I do not have numbers for jet fuel so, being a distillate also, I can only tell the consumers that those numbers are also up. They should take that as bad news. Today, oil is trading at $98 per barrel so; I don’t expect any lower numbers for the other two days of data.
We're witnessing the opposite effect with the Canadian dollar as well with it losing ground against its US counterpart.What was once an insulating effect is slowly coming back to burn consumers.We've lost five cents there in less than two weeks of measurement. It is essentially, the main reason we're looking at a rough three cents on everything.

Why the numbers are going up
Several reasons are being cited for the next round of increases that we are going to see, and probably will see, in the coming weeks.
The U.S dollars fall against other world currencies has led investors to drive up the cost of oil. While the U.S dollar is seen as a bad investment, they want to put money into other commodities like oil that have a little more security behind them. That’s another reason for the skyrocketing costs of gold. Even OPEC has discussed changing from the U.S dollar and that remains a bone of contention with some OPEC members who disagree with any future change in how oil is measured. Longtime enemies of the U.S, namely Iran and Venezuela, are soliciting for a change from the U.S measurement.

Other reasons for rising costs
. Continuing low refiner capacity. While there have been very modest builds in crude oil and gasoline inventories, there have been draw-downs on distillate inventories. Heating oil costs have risen as a result and the coming winter season has attracted investors there.
· Ongoing world violence. Kind of self explanatory but, we’ve been dealing with this problem for ages now. It’s still there and won’t go away. The problems remain in Northern Iraq remain and Turkey remains keyed to invade the region and pacify the Kurdish population. There remains a supply disruption possibility.
· No boost in OPEC production. OPEC announced last week that it had formally “lost control of pricing of oil product” but it would not be stepping up production of oil as it feels that the “market remains well supplied” with product. The markets reacted by trading up on oil.

Historic numbers
“At this same time last year, November 17/06, spot prices for heating and stove oils were recorded at 48.86 cents a litre. Gasoline spot was recorded at 47.39 cents a litre. This year those numbers are 66.10 cents for heating/stove and 62.53 cents for gasoline. That’s a 17 cent a litre disparity for heating/stove oils and 15 cents for gasoline. I don’t think I have to point out the implications of higher spots this year over last year.

Early summer forecast
“If we don’t see gasoline numbers come down before the spring hits, then we may see new record prices for gasoline again this coming summer. Add that to the fact that the U.S dollar is close to or, almost at par with the Canadian dollar, and we have a potential hit to our tourism industry. It’s going to be a little harder getting tourists from the U.S to drive up for a visit. Is there another tourism initiative in the works to help operators who will need the extra help in attracting visitors?

No announcement of rebate programs
“We’re still waiting for some kind of word from government on any heating rebate or retrofit programming for this year. While consumers are dealing with high pricing at an early stage of the season, those costs are reflective of last February. We still have a long time to go before we hit the winter peak in pricing. We need to make sure that all consumers are helped out with one of the most costly winters in recent memory. All Newfoundland and Labradorians, as well as Canadians, will be paying much higher prices this coming winter and all of them will need help.”

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For more information, contact;

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