Resource give-aways continue...
Welcome aboard Alberta!

See?

And you thought that the 1985 signing of the Atlantic Accord was bad, and that it was a bad thing for Newfoundlanders and Labradorians to be upset over our resources sailing away!

There's a pipeline construction project about to start in Alberta that will see almost 900,000 barrels of crude oil processed in Texas rather than inside Alberta. In context, making our offshore oil production a mere pittance against what Alberta has to export!

It's called the Keystone Project...

Canadians should be going off their heads,but there's hardly a whimper, except from the likes of some unions who are warning about the deal that would ship tons of bitumen to Texas for refining. It's just another classic example of crude oil resources going south of the border to power Uncle Sam's economy, rather than keep our own economy powered with secondary processing jobs.

The sale of this country's resources continues, and as reguards to resource giveaways, we at "gas and oil" would like to welcome aboard Alberta as being partly responsible for adding to Canada's energy shortages in the future!

On that "sour" note, I'll be in touch tomorrow evening on the trend in price changes for this coming Thursday!

Regards,

George

Oil gains

Consumers to pay

Media release

Conception Bay South, NL, April 05, 2011- Consumers will be taking another hit at the pumps this week, and prices for heating oil and diesel will continue to take a tole on consumers. That's from George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

"Blame it on Libya, the situation in the Middle East, North African unrest, or even steady demand, but the fact is that consumers should be pissed that, as a country that produces more than it consumes, we are subject to paying for fuels based on the world condition. I'm getting a little tired of hearing that our oil resources are sailing away for refining and to keep Uncle Sam happy, while we have our own citizenry freezing in the dark because of prices driven by speculators. It's high time that we saw the concept of 'Made in Canada pricing' for our own people through, and be damned the bottom line of the corporate bottom line." Murphy said.

"It's time we put in place a 'Newfoundland and Labrador first' policy on the further development of our own offshore resources, and it's time to start looking after our own people. We're just not seeing the full benefits of our resources. Food bank use is at an all-time high, the heating rebate buys a little less than a quarter tank of fuel now, food prices will continue upwards because of fuel surcharges, and pensioners haven't seen an increase in years. We have people choosing between food and keeping warm, and nothing is being done for the ones who need it most."

"The oil beat goes on."

"The numbers for this week are not good. Heating and stove oils are showing up again, this time by 1.24 cents a litre, diesel numbers are up by another 1.3 cents a litre and gasoline shows either 4.9 or an even five cents a litre increase on the way for Thursday.

"The only hope there is right now for us to see any relief is one of two things: a complete banking system collapse in the European Union, or a sudden drop in demand. While countries like Portugal have been showing signs of trouble in recent days with a huge bail-out needed for it's banking system, we still have not seen solid evidence of a drop in demand, especially in the United States. Prices still haven't taken their full hold of consumers pocketbooks yet."

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For more information, contact;


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

Err on the side of caution…
Interruption possible to most fuel products

Media release

Conception Bay South, NL, June 11, 2008- Consumers in Newfoundland and Labrador are starting to get used to the idea that pump prices are changing on a weekly basis almost every Wednesday now, and they may be right.

The numbers are close to those required for the use of the interruption formula so, the Consumer Group for Fair Gas Prices is warning of a possible increase at the pumps tonight as they believe that the criteria has been met for the use of the interruption formula to bump up pump prices by a possible five cents a litre.

“Six days out of seven needed are showing a move upwards by 4.4 cents per litre plus taxes and that works out to a plug nickel at the gas pumps but the problem here is that we simply just don’t have that seventh day of data needed to nail this one down,” said George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Heating and stove oils do not show the need for any price adjustments this week although it would not surprise me that they would go up in spite of my numbers. Here’s still a days piece of data that is missing and the numbers are close there.

Home retrofit program on the way
According to Mr. Tom Marshall on an Open Line show on Monday night, government is working on getting a home retrofit program put in place this year in the face of higher energy costs.

”While this might be seen as a good thing, it’s my belief that such a retrofit program should entail government help for those who want financial help in converting their heating systems from oil-based sources back to electricity. While electricity may be also based on demand, government has the ability through legislation, to prevent any spikes in electricity charges that may be passed on through Newfoundland and Labrador Hydro and that’s the beauty about owning the corporation. It belongs to the taxpayer of the province and we can call the shot on what costs that Hydro can absorb rather than pass down to the consumer.



Traders’ emphasis on distillates could mean more trouble
Heating and stove oil users can now be warned that, according to one news story from the markets this week, that special emphasis is now being placed on the distillate group of fuels as diesel and jet fuels have now become more predominantly used over gasoline worldwide. That means that heavier investment in diesel will be likely and that should be enough to support higher prices for any distillates for the foreseeable future. “There is a steady demand for distillates as both a transportation fuel and a heating source in the northeast of the continent and most of Europe and that means that consumers are more susceptible to higher price swings. This week alone, distillate fuels traded upwards by eight per cent and that’s for July delivery,” said Murphy.

New refinery on the way - but not for Newfoundland and Labrador
If you had your way, would you allow Canadian crude oil to go south of the border to be refined in South Dakota? Apparently, someone has…
Voters in Elk Point, South Dakota have given approval to rezoning for the construction of a refinery for Hyperion Resources that will, according to the Associated Press new story “process thick Canadian crude oil” at a rate of 400,000 barrels per day. Construction of the refinery is set to begin in 2010 and last for four years, bringing with it 1800 permanent jobs and 4800 jobs during construction.

“Why is it that we have to allow our crude to go south of the border for processing? What’s the matter with this country, that we can’t process our products here and ship the excess to customers in the United States if they want the product? Is it that easy to construct a refinery there instead of here? The Canadian government needs to do more for the consumer in this country like support the processing of our own resources in this country rather than help support the US economy. The Newfoundland and Labrador Government also needs to ensure that none of our offshore resources leaves our waters without secondary processing."

-30-

For more information, contact;

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

Answers from natural resources minister, Gary Lunn

Last month I told you all about a letter I wrote to the natural resources minister in the light of supply failures in Central Canada and what should be done in Canada as a whole, to answer the supply situation.

That can be found in my March 05, 2007 posting...

The letter was also intended to serve to set up an energy clearing warehouse and an inventory reporting system much like the "Energy Information Administration" in the United States.

Here's his reply dated April 12, 2007...

Dear Mr. Murphy,

Thank you for your recent letter regarding the tight supply of gasoline and related commodities. I appreciate the opportunity to respond to your questions and concerns.

I realize the difficulties caused by the recent fuel situationin Ontario.Throughout this period, Natural Resources Canada (NRCan) has worked closely with industry and the province to monitor the situation and do whatever was necessary to ensure adequate supplies were available to consumers. In addition, I certainly understand your concerns and those of other Canadians with respect to the negative impacts of increases in energy prices. Higher prices for these and other important commodities raise the cost of living for everyone.

While it is true that the Canadian refining sector has undergone significant rationalization in the last three decades, Canadian markets remain well supplied. Changes in the industry served to make the market more cost effective by closing down small inefficient facilities, which could not have been economically retrofitted to acomodate Canada's cleaner fuel standards and replacing them with new larger installations. Today, canada has more than double the refining capacity at its 19 refineries than it had when there were 44 refineries in the 1960's.

Although the economics would favour new capacity additions, there are a number of competing priorities for these investment dollars. Refining is a capital-intensive business that requires ongoing investment to remain competative. Over the last decade, most new investment dollars have been spent on refinery modifications to implement environmental initiatives and regulations, and to reduce energy intensities.

Industry decisions to construct a new refinery will be based on the perceived long-term economic returns. The slight increase in profit margins that refiners are now seeing is creating an incentive to invest in new capacity. Currently, Shell Canada, Irving Oil and Newfoundland and Labrador Refining Corporation have put forth proposals to build new refineries in Canada. Other companies are evaluating the possibility of expanding current refining capacity. However, these initiatives will take several years to be realized.

Although consumers in Southern Ontario were inconveienced by the decreased availability of petroleum products in February and early March as a rsult of refinery problems and distribution issues, there was always enough supply to meet the demand. This reflects the fact that all suppliers maintain inventories to bridge supply gaps when such unforseen events occur. Companies will always be cautious in drawing down stocks at the onset of a problem until the arrival of new supplies is more certain. Companies always ensure that they always maintain sufficient prduct to supply emergency vehicles and essential services.

Throughout the last few weeks, the government of Canada has worked with the industry and the provinces affected to mitigate any shortages. The Government is committed to ongoing collaboration with all interested parties to ensure adequate supply of petroleum in the interests of all Canadians.

Canada's energy policy continues to have its basis in a freely functioning , open market where companies are free to make business decisions within the regulatory framework that is designed to protect current and future Canadian interests. We consider that prices set in free and competative markets represent the best signals to producers in terms of their investment decisions, and to consumers in terms of the type of energy they use and how they use it. This helps to ensure that sufficient supplies are available at the most competative price.

Statistics Canada collects and compiles a wide variety of petroleum data relating to production and consumption. Tjhis data is available publicly through Statistics Canada's monthly Supply and Distribution of Refined Petroleum Products in Canada publication. The latest addition is available at the following web site:

http:www.statscan.ca/bsolc/english/bsolc?catno=45-004-XWE

For further weekly petroleum pricing, information on oil and petroleum product markets and ways to manage energy costs, I encourage you to visit NRCan's Fuel Focus website at www.fuelfocus.nrcan.gc.ca.

Again, thank you for writing on this important matter.

Yours sincerely

Minister's signature

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