Price changes for Thursday, August 27th, 2020

Hi to all,

 

Here’s what I have for this week’s price changes:

 

*Heating and stove oils show a drop of 6/10ths of a cent per litre.

*Diesel shows a drop of 5/10ths, and...

*Gasoline shows an increase of 2.4 cents a litre.

 

Market highlights

 

Hurricane Laura drives prices

While prices are not moving by a large amount this week, at least for gasoline, the number is more significant than it has been in some time with prices up sharply over the last two days.

     The reason is showing up in the Gulf of Mexico with at least 1.2 million barrels of oil production shut in in the Gulf, and hurricane warnings now posted for an area of the Texas/Louisiana border known for its refining capacity, offloading and pipeline transport of refined products to eastern and northeastern markets.

     In 2005, Hurricanes Rita and Katrina brought disaster to the industry and consumers with elevated prices due to the disruptions in supplies that the storms brought, with a situation where particularly gasoline prices ran out of control in some areas of the country.

     If memory serves, almost 4.8 million barrels a day of refining capacity was put offline for about two weeks, causing skyrocketing gasoline pricing.

     108 oil producing facilities and platforms were destroyed by Rita and Katrina outside of refining infrastructure, whereas no destruction of facilities offshore has occurred as of yet, although 1.2 million barrels of oil production is offline.

     Prices in Canada hit $2.20 a litre in Ontario and a then record $1.53 a litre in the immediate St. John’s area before moderating somewhat two weeks later, but only after some oil infrastructure came back online.

    Some differences between then and now worth noting however, as Rita and Katrina were both category 5 storms and Laura is category 3 as it hits the coast on the Texas/Louisiana border sometime Wednesday.

 

     **Numbers heading into next week are already showing 3 + cents up a litre at release time, that could affect next week’s pricing. However, positive news on oil infrastructure damage after the storm passes may negate this and show dropping prices.

 

Libya peace agreement?

Factions in Libya have reached a peace agreement that could add up to 1.5 million barrels a day to the world oil markets if it holds.

     Also an OPEC country, the agreement may force OPEC to take a second look at overall production at its next meeting as Libya was not included in the initial agreement on cuts made several months ago.

     Libyan exports mainly are exported to European destinations, but some does come into North American markets from time to time.

 

That’s it for this week!

 

Regards,

 George Murphy

Twitter @GeorgeMurphyOil 

A time for action...

"Whereas; the high cost of energy is proving to be a hardship on the people of the province of Newfoundland and Labrador, and...

whereas; heat is a basic necessity of life and a lack of heat is a health concern,...

we, the undersigned residents of the province of Newfoundland and Labrador hereby urge the House of Assembly to ask the government of Newfoundland and Labrador to remove the provincial portion of the HST from all forms of heat"...

Hi to all...

Ten years ago, on March 28, 2001 our consumer group presented a petition to the House of Assembly requesting that the government of the day remove the tax on heat. Some 55, 000 consumers and residents of the province signed the petition to remove the tax, with those signatures being gathered over a period covering three weekends.

It was one of the largest petitions presented in the House of Assembly up to that point.

All three political parties spoke to the tax on this necessity of life with the governing liberals keeping the tax in place, as they would suffer a loss in revenue, and the conservatives promising to remove the tax if they ever formed the government.

How times have changed!

For the past seven years since the conservatives have formed government, and again on Tuesday, this government will again tell the people of the province of a burgeoning surplus all from improving oil royalties. We will be told that the province’s coffers are again, overflowing with the benefits of added oil revenue.A small part of that reason will also be due to the fact that, with the failure of the government to remove the tax on heat all those years ago, several million of that surplus may very well be because someone in this province had to make a choice between heat and food.

Again, on the tenth anniversary of the presentation of the petition in the House of Assembly, the people of the province will be asked to sign a petition to be presented to the premier and finance minister asking his government for the removal of the tax on heat.

This time it is different and, in some ways, a little more desperate. Oil prices are forecast to remain high for the long term, as are electricity rates also forecast to escalate in the coming years. There is no sign of relief in sight.

That quest begins Friday, April 15^th with the start of a movement to get the taxes taken off this necessity of life and also a growing health concern for everyone. With projections of rising electricity costs to consumers yet to come, and no retreat in sight for petroleum product users alike, consumers and residents will be asked to participate in sending a clear message to government. Collecting a tax on a necessity of life is unacceptable in a time when this government (and the federal government) both are enjoying the benefits from our natural resources, and just a short twenty four hours after government-owned NALCOR has applied to the Public Utilities Board for an electricity rate increase to come to consumers on July 1st, 2011...because of the rising cost of oil.

Clearly, it is time to give back to the people who will need it most! Energy costs are rising and no one deserves to pay for a necessity of life.

Tomorrow afternoon, the prayer of petition will be made available on the NDP Party website at www.nl.ndp.ca and also listed on my blog for download and completion. There will be an address to return the signed petition to.

As well, the petition will be emailed, or mailed, to every municipality that is in the 2010 municipal directory. We're hoping that every municipality will post this petition where everyone in their respective communities can avail and sign it, and then send it back to us for presentation in the House of Assembly.

If you do not have an email address but wish to help us in our quest to gather names for this petition, we're asking you to phone us at the NDP offices at (709)729-0270 and we will forward a petition off to you.

Please pass the petition around and get others to participate in this exercise.

There is no greater need, and the time has come to do this now...

Remember.

Oil is trading higher.

Electricity rates are going up.

...and someone out there is being forced to make tough choices.

Regards,

George Murphy

Group researcher

Consumer Group for Fair Gas prices

OPEC ideas with oil prices might change your mind

If the Saudi Arabian oil minister is right, and OPEC succeeds in jacking up oil prices well above the July, 2008 record of $147 US a barrel, what would you think?

Good for the Newfoundland and Labrador treasury?

Good for the environment?

Just the other day, a CBC news story quoted Ali al-Naimi as saying that oil prices could surpass the record by the year 2012. In a nutshell, a boon for the OPEC nations that comes with much trepidation and concern for the consumers in North America and indeed, worldwide.

Consider this...

As oil prices hit the record of $147.23 a US barrel last July 7th, consumers were also facing the elevated price of heating oils that hit close on $1.24 a litre. The record heating oil price came close to killing the local heating oil industry here, leading to some radical changes in the ownership of the local dealers. Some retailers sold out leaving the industry here dominated by big oil rather than being influenced by the mom and pop operation.

If OPEC succeeds in driving prices in excess of the old record, will OPEC also succeed in killing the heating oil industry? Will we see an enforced conservation because people simply will not be able to afford to buy heating oils?

What of the affect on gasoline or diesel prices?

No doubt that pricing for refined commodities would hit the roof. The fact that OPEC is even of this way of thinking is both alarming, and a foreboding of the possibility of things to come if you're a heating oil user.

I don't think there's any consolation in OPEC's way of thinking and the provincial treasury simply would not be able to keep up even though the treasury would like the influx of cash. The reality is that OPEC is stepping on insecure ground and it's actions like driving up the price of oil could do more to impact demand by the consumer.

They could end up sshooting themselves in the foot...

But really...Isn't it time that Canadians insulate themselves from OPEC?

Your thoughts?

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