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?

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