Not much change, but the numbers are down

Media release

Conception Bay South, NL, June 29, 2010- The numbers are pointing down. Not by a great deal, but enough that there won’t be a price increase this week, in spite of the market activity last week. That’s from George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

‘I watched the markets closely last week and noticed the glee that must have been on investors eyes when word came of tropical storm Alex’s formation and track into the Gulf of Mexico region, and that put upwards pressure on oil and it’s related and refined commodities,” said Murphy. “But then I saw the downside the past two days when the markets started telling the true story of a stall in any world economy out there. It’s like I’ve been saying all along, that this market recovery is artificial and is boundless. That message has played in on oil prices again.

“Heating and stove oils show a decrease of 42/100ths of a cent, diesel down by a half cent and gasoline shows a drop of just three tenths of a cent. It may not be a big lot, but it may also be indicative of what’s to come next week.

“As of today, it seems that oil and its related commodities have begun another precipitous slide in price. I don’t know how long the message has to be out there before investors and governments finally get it that the world needs cheaper oil to aid any economic recovery efforts and prevent any hindrance to consumer spending. The world economy will not recover fully based on oil anywhere over OPEC’s old 2005 targets, or at prices for refined commodities that consumers and business can no longer afford. That’s the story that is being told in the world markets right now; that Big Oil has killed any prospect of immediate economic recovery happening. The real story of ‘invest in oil’ seems to have reverted to ‘divest from oil.’”

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For more information, contact;

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

By the way. The budget was based on $83 US a barrel WTI.
I don't know where they got the forecast, but they didn't ask me.
Numbers so far:
March/10:$81.14 US
April/10: $84.82 US
May/10: $74.18 US
June/10: $75.33 US
Can you say "deficit"?

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...