More drops in pricing on the way

Just to keep you up to date.

With two more days of data to attain, numbers are so far showing more drops to gasoline pricing as well as heating/stove oils and diesel fuels.

Numbers are showing a drop of almost four cents on stove and close to three cents on diesel. The stove oil numbers could be a good indicator of where heating oils will go. Once again, the heating oil mix includes a combination of 75% Jet and 25% number 2 just for the winter heating season and I have not been able to track down an accurate jet fuel number so, this number is more to be used as a rough guide as to the direction heating fuel will be going.

Gasoline is showing almost 3.5 down...

We'll let you all know again about what will come about around 9:30pm this Tuesday night when I'll have all the numbers in....

I'll be in touch...

Regards,

George

UPDATE:

As of Monday evening, I'm now showing definite drops across the board for all fuels.Gasoline shows 3.7 a litre down,heating/stove oils are 4.32 down and diesel down by 3.1 a litre.

I'll give the final numbers Tuesday night, around 9:30p.m......

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.

-30-


For more information, contact;

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

Consumers to get a break at the pumps...again!

Hi to all...

Just a quickie as I'm probably going to be doing a cross-island jaunt west again as there has been a death in my family. I have not put together an official news release on this as time just simply won't forgive me.

Not all the data is in but, here's a synopsis of what to expect. I don't think there'll be much change in them between now and Wednesday night.

Numbers
Numbers show 2.39 down on heating and stove oils (13 days out of 14 available), 6.1 down on gasoline (6 out of seven days available) and 4.2 down on diesel (13 days out of 14 available) for this Thursday morning.

Looks like CBS gets the honours of being first under a buck, eh?...lol

Reasons why prices are dropping
1) A drop in world demand and poor world economic performance has resulted in a steep decline in the numbers in recent days and that will result in consumers receiving the benefits of that drop.

2) There has been some moderate recovery in the Canadian dollar and that has played into the numbers. Over the last week, the Canadian dollar has recovered almost nine cents against the US greenback.

3) I believe that the markets have recognised OPEC cuts of last week. While oil has bounced around $65 a barrel over the last two weeks now, their related, refined commodity has shown drops as a result of reduced world demand. Look for OPEC to make another cut of 500,000 barrels at it's next meeting of December 17th as it "pays attention" to the poor economic news and moves to support it's own revenue stream.

4) This might be the last drop in heating and stove oils and we have now reached the point they were for the same timeframe last year when we saw pricing start to rise. We're entering the higher winter demand period and that also means more upwards pricing pressure. I think I would top the tank off now to be sure. In the meantime, another sell-off in the markets might start to make pricing fall again so, take that piece of advice with a grain of salt too...lol

5) My gasoline average shows that there will be possible interruption in prices if market conditions allow for spot gasoline to maintain or further drop in value. If that doesn't happen, as interruptuion requires a four cent average move +/- from the last setting, then consumers can expect to see another drop in prices in two weeks time. My average right now is 48.66 a litre over last weeks range of numbers but yesterday, gasoline traded at 44.23 a litre, a 4.43 a litre difference.
I'll keep an eye and let you all know ahead of time.

Hope this short entry helps?...


Regards,

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

Could it be? Gas under a buck a litre?

Stay tuned next week for news on this one. As incredible as it sounds, numbers are already showing a drop in gasoline that could bring gasoline under a buck a litre for CBS residents. Numbers are down by four cents already after today's trading.

Numbers are also showing diesel and heating/stove oils to drop next week as well as oil continues to bobble around the $65 a barrel mark and the Canadian dollar continues to gain some lost momentum from the past two weeks losses.

Stay tuned...More on Tuesday night.

George

Numbers show no interruption this week...

Hmmm...

After such a round of price drops, I was getting a little too used to informing everyone that pricing would be coming down again and, I just knew it all had to come to an end sometime. It's not overwith yet but, it is going to take a little loger to see the price come down this time.

While numbers do not show an allowable for the interrupter formula to kick in, they are still down slightly enough that we might see a drop in pricing coming for next Thursday now at best.

With the latest round of OPEC cuts (yes, they did a 1.5 million cut as predicted here) I expected market reaction to be delayed on the news and to see that cut play itself out in the markets after the first couple of days. Seems we've stalled at falling oil pricing and traders are getting a little "reluctant" in getting oil below $60 US a barrel. No doubt the province here, at least the finance department, will be drawing a sigh of collective relief on the sudden "stall in the fall" of oil pricing as well.

Anyways, numbers here so far are showing at least 3.3 down on gasoline, 1.55 down on heating and stove oils and 2.6 down on diesel. I guess we'll hold out some hope that we'll see the slide in oil continue but, from the look of things we just might have seen the price of oil and their related refined commodities stall for now. The proof of that probably lies in the fact that the drops in price are small right now.

**Just to note: The Canadian dollar has now lost a good 24 cents against it's US counterpart since September 28th and that has cost Canadian taxpayers a rough 23.5 cents a litre, give or take a few tenths of a cent. That's what we get for being tied into being a "petro-dollar" and not having a diversified economy like we should have...

Oh my...

Regards,

George

Might be the end of the line for now
Consumers in NL will see another drop in pricing this Thursday

Media release

Conception Bay South, NL, October 21, 2008- Consumers in Newfoundland and Labrador should see another drop in pricing on most fuel products this coming Thursday, that’s according to George Murphy, group researcher with the Consumer Group for Fair Gas Prices.

“Numbers are showing at least 3.4 cents a litre down on heating and stove oils, 3.7 cents a litre down on gasoline and 4.7 cents a litre down on diesel fuel. The drop we are seeing has been mitigated somewhat by a falling Canadian dollar. Had the dollar been rated at the same rate we were looking at on September 29th, we’d be looking at pricing that would have been eleven cents less than what we’ll see on Thursday. An unsupported dollar is costing the consumer quite a lot of money and will come back to hit users of heating fuels especially hard,” said Murphy.

“Substantial builds in gasoline and crude oil inventories have helped dropped the price of oil. Match those numbers with the prospects of a recession and we have the formula for dropping prices. The unknown variable of OPEC cuts are, however, raising its ugly head and I expect to see OPEC make production cuts in the area of 1.5 million barrels a day later this week, well ahead of their regular meeting of December 17th. If they cut less than that, I expect prices to keep dropping. Any more and that will help to temporarily support pricing of crude and their related refined commodities. All hinges on OPEC’s emergency meeting later this week.”

-30-

For more information, contact;

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

Another drop in prices coming, but...

From the look of things here in the nest in CBS, it certainly looks like we'll be looking at another round of drops at the pumps when the Petroleum Pricing Office sets prices again at the regular interval.

So far, five days of data are showing diesel to drop by 5.6 a litre, gasoline down by 4.5 and heating/stove oils to drop by an important 4.53 cents a litre.

I'll be cautious on this one. OPEC is meeting in the wings of the latest round of price drops to come and I expect them to make substantial cuts to production. Maret-watchers are looking at OPEC to cut production by a million barrels per day. I'm betting on them cutting 1.5 million as they've already cut some production. Iran has already reduced daily output to 3.7 million from 4.3 a day and Saudi Arabia has also reduced ahead of this so-called "emergency meeting".

While not necessarily true that any cuts would help to stabilize the price of oil somewhat, they are facing the prospect of a larger worldwide economic recession and they want to prevent any kind of a glut that could help crash the pricing of oil to them.

Expect an OPEC announcement as early as Tuesday on future cuts. If that's the case, it might be the last of the price drops we'll see barring any real collapse in the North American or European economy.

Why am I crossing my fingers?...

Regards,

George

Another break to consumers on the way
Numbers show interruption to pricing this Thursday

Media release

Conception Bay South, NL, October 13, 2008- Consumers can expect to see the benefits of the last weeks crash in oil prices again this week as the Petroleum Pricing Office will be forced to use the interruption formula to bring down pricing, that’s from George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

“Six days out of seven days data are showing good drops coming to diesel, heating and stove oils and gasoline. Diesel is expected to drop by 6.1 cents a litre, heating and stove oils by 6.65 and gasoline by 7.7 cents a litre this coming Thursday morning. Keep in mind that there may be slight changes to these numbers as there is still one more day to account for.

“The near collapse of the markets and the resounding drop in oil prices last week that bordered on the dramatic are chief reasons why pricing will have to be adjusted down. The numbers would have been substantially more except for the Canadian dollar losing almost 16 cents value against its US counterpart. In effect, consumers in Newfoundland and Labrador should be paying close to nine cents a litre less for gasoline than the new posted price this Thursday as a result of the loss of value in the Canadian dollar since September 29th. Heating and stove oil users would be looking at prices eight cents a litre less for the same reason. It goes to show that Canada is a little too dependent upon its natural resources for export rather than secondary processing. The dollar is weak compared to the troubled US currency and that says a lot.”

Update: heating and stove now shows 6.98 down, gasoline down by 7.7 and diesel down by 6.6 a litre. That's with seven days data. There will be interruption...At least, according to my numbers...
-30-

For more information, contact;

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

To keep you up to speed...

Just to keep you all up to date on what's going on with prices...

Hold off on everything.

Heating and stove oils are showing seven cents a litre down, Gasoline is down by 8 and diesel is showing 5.8 cents a litre down as well.

With two more days to become a reality, I would expect that all fuels will fall under the guise of the confines of the interrupter formula and all pricing should be down AT LEAST that much as of Thursday.

I'll be cautious though, as there are still two more days data to get yet.

Stay tuned...

George

2008-09 Could be another expensive winter
Heating oil costs expected to meet or beat last year’s numbers

Media release

Conception Bay South, NL, October 9, 2008- Consumers in Eastern Canada can expect to pay the same price as last year for heating oil product and they have a good chance of setting new records for the fuel, that’s from George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

What we may see this winter
“Consumers are facing an uphill struggle again this winter as several factors have played into the marketplace to work against the cost of heating and stove oils. As of today, we are presently 16 cents a litre higher than where we were last year and we are also facing a lower Canadian dollar. That in itself has cost the Canadian consumer an added six cents a litre this past week and is going to be hard to overcome,” said Murphy. “If these numbers hold up and nothing else changes and we see the same rate of increase as last year, we have a good chance of the consumer paying upwards of $1.38 a litre for heating oils this winter if I pare that with last years record of $1.22 a litre. That, I caution, is a number based on the actualities I see now and not the actual that may occur if consumers are faced with other outside issues or circumstances. Pricing may be mitigated somewhat simply because consumers won’t be able to afford the product in the first place.”

The “If Factors”
“We do have some conditions in the markets that may change the playing field and they remain a lot of what I call the “If Factor”. Refiner capacity, for example, remains at a historic low and this has affected the building of heating and stove oil inventories. They simply did not increase during the off-use season. OPEC is trying to put together an emergency meeting to discuss possible production cuts in an effort to help sustain pricing. If they cut production in the face of economic slowdown, then we can expect pricing to be supported. There are, of course, other geo-political conditions I don't need to touch on here.

Changing conditions
“Consumers can see the opposite happen if recession hits. Again, prices have a slight possibility of decline if the use of distillate fuels drop because of the economic downturn but that has also to be matched by an increase in refiner capacity and gains in inventory status in the United States. Again, if a slowdown does occur, industries who use number two oils will not need it and distillates may increase because of less tractor trailer use.

Impact of jet fuels on the winter heating mix
“While our winter heating mix contains 75 per cent jet fuel to #2 mix and, as of today those prices remain strong being almost a nickel a litre higher in value against last years numbers. I would have hoped that the drop in airline usage would have impacted that, but to no avail. Again, we have to see increases in inventories to impact the price and that simply isn’t happening.

Consumers and governments face the reality
“Consumers will have to take a long, hard look at the type of heating system they use at their homes. Heating oil usage has been measured at a historic low in the United States and has declined in use to only 7 per cent of the northeast population, the majority of the population of which have already made the switch back to either natural gas or electricity. It may be costly to do so but, there may be some worth in the consumer investigating the switch and cost-effectiveness of such a conversion. It may simply be a case of where heating and stove oils have become redundant means of heating even though there is still a consumer need.

“Government is looking at the rebate program in Newfoundland and Labrador but there has been no word yet on the program or what it entails. To add to that, the federal government needs to actively pursue their involvement in the rebate program on a national basis as they are chief beneficiaries to any taxes collected on heat. While a conversion to other forms of heating is expensive to consumers, government may also be forced to look at helping out consumers with the costs of conversion along with possible home retrofit-type programs to help consumers save.”

-30-


For more information, contact;

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

Financial crisis deepens, recession fears grow
Prices for petroleum products to drop on Thursday

Media release

Conception bay South, NL, October 6, 2008- The price for oil continues to drop in concert with the ongoing financial crisis worldwide and that will result in some pricing relief to consumers this week, that’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“While there is a strategic withdrawal from the commodities markets, traders have also been pulling out of the oil markets and that means a drop in the value of crude oil and its related refined products. Thirteen days data out of fourteen are now showing that gasoline pricing will drop by close to six cents a litre on midnight Wednesday,” said Murphy.

“Heating and stove oils are projected to drop by close on 2.2 cents per litre while, diesel pricing is forecast to drop by 1.7 cents per litre. I expect that, in the next couple of weeks, if the economic slowdown really kicks in, then diesel users will start to see some more solid drops, more substantial that we have been seeing as of late. As heating and stove oils are also part of the same distillate group of fuels, we’re hopeful that this may carry over to bring further relief to heating oil users.

“We have noticed that the Canadian dollar has lost a lot of ground against the US greenback in recent days, losing something in the order of seven cents against what it was two weeks ago. That alone has cost the consumer at least a nickel against the drop we are seeing. We should be looking at eleven cents down at the pumps. The drop in the dollar has also cost Canadian consumers as much, if not more, and we have no recognition that we have a problem with the Canadian economy. We’re told that the economic fundamentals are strong. We have the proof here that they are not. Some leaders really need to get their head out of the sand.

“We know that there still should be an ongoing concern that OPEC will step in and start to support the price of oil. I would be deeply concerned with winter heating oil pricing if there are a round of cuts. Any support of oil pricing at this juncture now means trouble for the Canadian consumer with the dollar slipping as it is.

“The real news this week in oil doesn’t come from the facts of Nigerian violence or ongoing promises of supply disruptions. Nor does it come from the fact that inventories of gasoline and crude oil improved. It comes from the fact that traders artificially inflated the price of oil in the first place and now, with the collapse of the financial markets and the promise of recession coming from the major Canadian banks, everyone is going to get burned. We may be seeing some price relief but it is far under what the markets should be really doing here. The failure to support the Canadian dollar at this time of crisis is the recognition that Canada is too reliant on one industry, that being oil.”


-30-

UPDATE: All data in now shows 2.43 down on heating/stove oils, 2.0 down on diesel and 6.3 down on gasoline, all by the litre of course!


For more information, contact;


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

Changes coming to the update...

Starting this next week, a lot of viewers and readers will be noticing some changes to the update that I do on a regular basis and I figure that i would alert you to one major change that is coming over the next couple of weeks.

Users of diesel fuels will be of particluar interest as I believe that I can come out with accurate numbers to reflect changes to diesel pricing.

Fisherpersons and truckers take note...

Starting this week I will begin to make predictions on the movement of diesel pricing as new information and sources have recently come to light. It might take a week or two to develope the base price for the product but, a random sampling shows that the model I have been working on may be the cat's meow.

The update will now include three fuels, gasoline, heating oil (#2) and diesel fuels.

Look for those pricing changes in the next update.

In the meantime, gasoline still shows a drop coming (-3.7/Litre) this next week along with slight downwards moves for heating oils (-.10/Litre).

Stay tuned!

Regards,

George

Going...going...

Gone...

While other markets saw a substantial drop in pricing the day before yesterday, the rbound in the markets saw some pricing rise again...

Such was the case with the numbers on this end as well.

From the looks of things, we're going to have to wait another week before we seeanything drop at the pumps. The precipitous drop in the markets didn't last as I thought it would have and gasoline traded upwards again. That was enough to put the kaibash on any decrease we could have seen. Numbers were initially projected to range 4.5 to 5 cent a litre but then yesterdays market numbers changed that to closer to three cents.

That means no drop coming for diesels either and that stinks...

You need four cents before interrupt would happen to pricing...

Oh well...

Hopefully the markets will wake up and crash again before then and we'll see something more substantial for next week...

Regards,

George

Prices down...

Look for gasoline to drop by Thursday

With the latest sell-off on Wall Street and traders doubtful about the US bail-out, it certainly looks more likely that gasoline will experience another huge drop later this week, all under the guise of the interrupter formula.

So far today, gasoline is trading down close on seven cents per litre against a drop in oil prices of close to eight bucks US a barrel.

Seems that the markets are doubtful about the bail-out and thusly, are showing the fears of an economic slowdown in our midst. If there's lower demand because of a slowing economy, there's less use of petroleum products. That means lower prices for you and me.

As to how much things could slow?...

According to Blomberg, Deutsche Bank has cut its 2009 forecast for oil prices another 23% and they figure that the average price of oil could hang under $85 US a barrel for the remainder of the year ahead.

Just keep cutting boys, just keep cutting!...

In the meantime, hold back on any major purchases of gas at the pumps. I'll have a better prediction on exactly how much it'll be going down as early as tomorrow morning. Be looking for that.

Regards,

George

Gasoline to drop?

Numbers show a good drop coming...

Greetings from Corner Brook!

Might be a little late in coming and in doing the posting thing but, hey!...

Just a shortie this time around....

Six days data out of seven are showing only a 1/3 of a cent drop in heating oils.

Gasoline is a different story, however...

Gas is showing another major drop, this time measuring close on six cents per litre. I'll have more later this week but, don't be surprised if you see gasoline numbers drop more than what I have here. It has been a very different week with a near collapse in the markets thrown in with hurricanes and such!...

There is plenty of volitility in the numbers here too...

Regards,

George

Ike crisis passes
Gasoline and heating fuels to drop tonight

Media release

Conception Bay South, NL, September 17, 2008- Consumers in Newfoundland and Labrador will experience a huge drop in gasoline and heating oil prices tonight when prices are set by the Public Utilities Board.

“Consumers in the province rode the wave that Hurricane Ike brought with it on Sunday night and they’ve done their part in conserving in the face of the crisis. Tonight, pricing for all petroleum products are showing strong downwards turns as a result of the restraint they practiced. That, along with drops in the prices for crude and their related products, leads me to believe that the interruption formula will be used to drive prices back to something more bearable in the next few hours. Numbers are showing in excess of 11.7 cents a litre down for gas and greater than 4.5 cents per litre down for heating oils,” said George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“My guess was that the PUB was going to have to step in here and return the market to some normalcy after the news on Ike. The news of economic bailouts for some major financial firms also helped motivate the numbers down because of economic fears and fears of a drop in consumer demand connected with that.

“The PUB did its best in protecting consumers during this crisis. Consumers here were protected over the weekend and didn’t face the “Ike Hike” until Monday morning. When prices come down, it would have been a three day window where prices would have been up. Prices in other markets rose in some jurisdictions as soon as the same day. Toronto, for example, increased prices by 13 cents and didn’t come down until Monday night, a full five days. Here, we experienced a three day increase that will be passed back to consumers as early as this evening.

“Retailers in the province also played their part in the Ike scenario. They protected themselves by buying early when news of Ike initially broke and there was a much talked about possibility of a run-up in gasoline pricing. They didn’t have to face high prices of purchase when they hit because they bet against that news, a process known as hedging. They learned from past experience and it paid off in spades for them.

“Consumers should also be aware that, while there is a slight correlation between crude and gasoline prices, gasoline is traded as a separate refined commodity on the New York Mercantile Exchange. Just because prices for crude are down, that doesn’t necessarily mean that related refined commodities prices are also. In this case, while crude oil traded down over the last few days by something in the area of $9 US downwards, gasoline is showing close on twelve cents a litre down.

For more information, contact;

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

Ike update: Most damage to refineries "superficial"

From the looks of the slide in oil and gasoline pricing on the New York Mercantile exchange today, the latest spike in pricing may be short-lived as predicted.
Gasoline trading down another 21 cents a US gallon (roughly 6.3 a litre)
Oil down almost $5.00 on the news of more economic damage in the face of the Lehman Brothers going under bankruptcy protection.
Damage to refineries in the Houston area may not be as bad as first thought and are facing mostly power outage problems. Remains to be seen how long it will take to overcome those problems. Most refiners describe their respective shutdowns as due to "superficial damage"...

Keep holding back on any purchases as the retreat in gasoline has started and the situation could result in a drop in pricing sooner than first thought.

Regards,

George

Ike Update

Hi to all...

Some good news in all the Ike mess...

Gasoline now trading down in electronic trading, down now by close on 12 cents a US gallon.

News from the Gulf area seems to indicate that there has been a little damage but nothing substantial-SO FAR.

Refineries still remain closed but it shouldn't be too long before they are up and operating according to that. How long is the question. While it wasn't the wind, it is the water that damages refineries more and flood damage remains a concern. Ike came ashore as a category 2 storm and the storm surge was not as high as was initially projected, being recorded close to 13 feet rather than the initial 20 feet.

In the meantime, crude oil is also trading lower as refineries do not need what they cannot process. That is causing a slight build in available crude stock in the markets.

The recommendation still holds: to fill up tonight before the wave hits our wallets and then stretch your usage as long as possible. My best guess is that this one may dissipate sooner than the Katrina event and things may get back to "normal" sooner than the expected. If the damage assessments keep coming in with good news, look for pricing to retreat.

Hope this helps!

Regards,

George

Highway robbery

Well...

In areas of the country that got hit with upwards of a 13 cent a litre increase, there are a lot of people thinking that this is a case of highway robbery...

They'd probably be right in this case...

Hurricane Ike may be blowing ashore and having it's effects on New York harbour pricing that we're seeing hit us right now, but, are the traders right in pushing pricing up?

Doubtful, and here's why...

Back at the time of the Katrina and Rita hurricanes during the Labor day week of 2005, consumers saw gasoline pricing increase while still in the demand season for gasoline and while, at a time when refiner capacity was measured well above todays 78 per cent...

Memory is failing me but I do believe that capacity was measured somewhere around 92 per cent. That number alone tells you that there is more than enough extra capacity to take over where any disruption might be occuring, or will occur after this weekend when the damage assessments are done.

Here's the big second notion; Consumer demand is lower now than what it was back then. We're presently down 5 per cent from the same time last year. While inventories may be down from last year they're not described as "critical".

What gives Big Oil?

I think it's high time we in Canada start to look after ourselves and trade based on a Canadian condition and not where Uncle Sam thinks pricing should be...

Thoughts?...

In the meantime, a caller to a local Open Line radio show here told the host that while he was at a local gas station here, the station owner told him his cost for purchase had already shot up close to 11 cents a litre. That's before taxes...

Number I have here is 10.2 cents plus...

Be warned!...It's coming!...

Regards,

George

Enter Ike...Stage center

...and here we go again...

Latest word tonight is coming compliments of a note I received from the Toronto area that is warning of an imminent 13 cent a litre increase at the pumps.

Yes...I said 13 cents a litre.

According to Bloomberg's news service, they say that Gulf Coast gasoline that comes mainly from the Louisiana and Texas border area, increased in price today to close on the markets at close on $4.74 a US gallon. That was a 50 per cent increase and, as they say in the article, the largest increase in the cost of gasoline since 1973 and the Arab oil embargo.

Unbelievable as it is, your energy and the use of our natural resources, is not on anyone's election agenda as of yet. Fifty bucks says that, if Toronto consumers get hit with an added 13 cents a litre tomorrow, it will be on Harper's agenda by Friday...

If you're in Newfoundland and Labrador (and I'll be cautious about this one) I'd fill up the vehicle by the morning and try to let it ride for a few extra days just to see if the New York Mercantile Exchange decides to play the Ike factor tomorrow.

So far, Ike has shut down upwards of 2.2 million barrels a day of refining capacity available in the United States Gulf coast. That's about 14 per cent of overall US refining capacity. Most refining capacity that has been shut down is centered right where Ike is forecast to come ashore, in the Houston area. Refineries lay dormant for now until after the storm rolls through and any damage can be assessed.

Again, we'll keep everyone posted right here on what's happening(if anything) and keep an ear to the local media as I usually pound out a press release to them now and then. If this thing does indeed play itself out in Toronto tonight, you can bet your bottom dollar that it will play out in other areas of the country.

It's all getting so tiresome, this Katrina and Rita play the traders keep using. I just want to know why all these things are not on the election radar for any party...

Regards,

George

Does anyone understand the Green Shift yet?

Really...

I'm not the world's greatest environmentalist but, in an effort to understand the Green Shift, one is going to have to take the initiative to find out if there is a financial benefit to the "shift". I guess the secondary thought in all this is that, if you have to think about it, you're probably not in tune with any environment concerns that pop up in the news.

Maybe some of us simply don't care anyway...

My house and the Green Shift"

Either way, the Liberal Party has come out with their "Green Shift" and, in an attempt to understand what it will cost my household, I used their calculate to total our benefit. I them used a handy online carbon footprint calculator and got a good idea of what the proposed $40 per tonne carbon tax would costs my family.

The results?

Based on an estimated $49,000 per year total family income, according to the Green Shift calculator on the Liberal.ca website, my household would receive an annual benefit of $2090.00 per year.

According to a handy, carbon calculator I found online, I would be taxed, at $40 per tonne, or $458.68 per year. That means our household will benefit by $1631.32 a year.

As a sideline, because I know a lot of people are concerned about being "nailed" by carbon taxes on heating fuels, I also did a calculation based on 3000 litres a year of heating oil. It added an extra 1.146 tons of CO2 emissions and, thusly another $45.84 annually to my expenses.

Now, here's what I didn't like about my introduction to the Green Shift program...

When I went to a meeting held in Mount Pearl a few weeks ago, I asked the question about how the government thinks that costs associated with carbon would not be passed down to motorists. At the meeting, Bob Rae told us all that there would be tax breaks to the oil companies for the retrofit and purchase of equipment that would be used to reduce the impact of CO2 emissions. If anyone thinks that the costs associated with making things a little bit greener at the refinery is not going to be handed down to the consumer in the form of higher prices for gasoline, he's living in a dreamworld.In this case, it's Mr.Rae. He came here to give the right message but screwed the pooch on it...

Ahem...

I have a problem with granting tax breaks to Big Oil at a time when they are making huge profits off the backs of consumers who can't afford the prices they are being charged yet, have to buy because they need it. The Liberals are going to have to try and explain that one. We're already on an "enforced" reduction in greenhouse gases...

The second thought I have on the issue is that, while I may be able to afford to take a hit "up front" with carbon taxes, the Liberals are going to have to promise to take the hit "up front" to prove to the consumer/taxpayer that this is a good thing-especially for those people on a fixed or lower income like seniors. They will need the money up-front just to help pay the extras that the Green Shift will put on them. If you're going to start taxing heating oil in year one of the carbon tax plan, you're going to have to provide everyone with "an advance" to get them over the hump of extra taxes on heat. Again, we're also going to be dealing with an added tax on heat which, as far as I am concerned, should never be. Consumers now are being forced to conserve on heat because they can't afford to pay more for what they need! The product price itself is forcing a "Green Shift" and we already know about the GST charged for heat...

It should have been a different "Green Shift"...

Canadians recognise the fact that we have to reduce our carbon footprint I think, but why did we have to go this way first before making an attempt at introducing other viable energy options that wuld compete against the carbon causes? Why doesn't one government do an assessment of Canada's energy needs for the future, in the form of a national energy plan, and introduce that as a "competitor" against the use of carbon-causing energy producers now? In other words, while heating oils are a cause for carbon emissions, why not introduce cheap electricity to encourage the consumer to choose that form of energy to keep warm rather than use petroleum products that are artificially supported by NYMEX investors?

Here's my reasoning and, some might even think it's nuts...

Let's take Churchill Falls...

If the idea is to make available cheaper energy and cleaner energy, is there none more cleaner than hydro or wind power? If the government were to give the province a loan guarentee to ensure the availability of more electricity to the North American grid, would it not then become a major player in keeping down electricity costs elsewhere in North America? Is the government going to tell us that an National Energy Plan that would include a Lower Churchill project would not be sold to the people of Quebec if the Quebec consumer was told, and it was proven, that their electricity costs could help break the OPEC dependency and that they could make the switch from oil generated heat to electricity? Would the Lower Churchill help in greenhouse gas emissions by taking some of that same electricity that is oil-generated in Holyrood offline and shutting down the world's sixth largest emitter of CO2? Would heavy investment in wind generation or tidal generation help to reduce the Canada carbon footprint? I say 'yes' and I think it's high time that this country takes stock of it's abilities when it comes to being "carbon free". We need a Green Shift alright but, we need it on a national perspective as well...

What we need is a "natinal energy inventory" done. A 'Where can we get it', 'the benefit to the consumer and industry' and a 'for what costs' type of program...

Numbers this week

Speaking of pricing, data used to make predictions on pricing movements has been weak the last two weeks and there is simply not enough to make a prediction that will stick. My sources are starting to dry up a little I think. I'm working on some other methods that I hope will come to fruition so, stay tuned. Numbers that I do have show a modest drop in heating oils of 1.7 cents and no change for gasoline; that's with a bare seven days data out of fourteen needed.

To find out your carbon footprint, go to www.carbonfootprint.com

To use the Liberal Green Shift calculator, go to www.liberal.ca

Summary

People are going to have to make up their own minds about the Green Shift. I know that, for the information I have, there appears to be some financial benefit to our household against what it program is initially intended for. We have to do something to protect the environment but, it also appears that there is only one party with some sort of a plan, as problematic as what it may appear to some...

Hope all this helps!

regards,

George

Here comes Gustav!

I'm back from a short vacation and first off I have to apologise to some out there who use the blog as a source for my releases on the iminent movement in pricing here in Newfoundland and Labrador. It's been ten years now since I started my predictions on the movement at the pumps or at the heating oil truck, but only the first time I took a vavcation that affected any release I normally would have done.

I will be back with new numbers in the coming weeks so keep an eye. I have not simply just "gone away".

But, then again, pricing issues never will either and, hence the topic for this entry. I've told you about "Hurricane Syndrome" and we have our first test case on the block...

If I were a smart consumer and betting on the markets, I think I would be filing my tank just about now-and again by Sunday.

The reason?...

Hurricane Gustav has been projected to hit the U.S Gulf Coast as early as this weekend and that means that, in the area there is another possibility that there will be refining disruptions as well as potential damage to other oil infrastructure in the Gulf of Mexico.

Ironic as it is, it was on the Labor Day weekend that also saw the advent of two other hurricanes that disrupted almost 20 per cent of overall US refining capacity. At that time here in Newfoundland and Labrador, consumers saw a spike of $1.48.1 a litre at the pumps...

If Gustaf hits the main concentration of oil infrastructure on the weekend it may very well pale in comparison the potential record we could see at the pumps. It may very well be that, if there is major disruption in production or supply, we could see an added 30 cents a litre at the pumps. The only condition that may help us avoid the hit is "what category hurricane will we be dealing with?"

Why do I say 30 cents?

In the week leading up to the Katrina hurricane hit, spot pricing averaged 60 cents a litre. A corresponding increase of 38 cents a litre was realised on the markets but the full impact of any increase back then was absorbed by the Public Utilities Board at the time. It was simply a case of "wait and see' as the news came out. If it was bad on one day, an "allowable" increase in pricing was granted. That scenario can be expected to be repeated again this time around as it did save the consumer some grief-if I can call it that. It saved us from some of the $2.25 a litre prices as they had in some areas of Ontario and $1.89 a litre in Halifax. Our "maximum allowable" turned into the "record" at the time of $1.48.1 a litre that has since fallen. The unknown variable in all this is wind spped. While the NHC currently has a 30% chance of windspeeds over 74 miles per hour, what will the actual category be by the time this one hits Louisiana again?

So, consumer be warned here!

I fully expect the traders to start bargaining in bad faith on the "promise" of a supply disruption-again, and I also expect the panicked analysts on CNN to again help the trader "justify" his numbers as they push for the potential of $6.00 US a gallon gasoline-again. Back at the time of Katrina, a CNN reporter talked about the potential of $5.00 a gallon and helped institute a panic in the central US.

Let's see if they go for a repeat.

Remember where you read it first IF Gustav hits the processing areas as is the promise from the National Hurricane Center and, if it exceeds a category 3 storm, we can expect to see a run in the markets as the sharks have been let loose...

Keep the gas tank full and conserve throughout this one when it hits.

Regards,

George

Update #1: Gustav will now hit shore just west of New Orleans. That puts it a little closer to the Louisiana-Texas border where there is a heavy concentration of oil refining facilities. It wasn't so much the winds of the Katrina storm that shut down refineries as much as it was water and flooding. Gustav is forcast to dump as much as 50 centimeters of rain while it is in the area.

Electronic trading on the New York Mercnatile Exchange will begin at 4p.m Newfoundland time, 2:30EST, to allow traders to "cover their short positions" and to allow for same-time trading with traders in Asia. Gasoline retail pricing along the path of the storm has already increased by several cents a US gallon.

The next twenty four hours will tell the tale on where pricing will be headed. I'd rather err on the side of caution on this one.

Update #2: Gustav has come ashore just slighly west of New Orleans as a category 3 storm. That probably means a little good news on the oil markets as hurricane damage may be minimised. All hinges on the re-start of refineries in the area directly after the storm now as some of those same refineries were closed up due to water damage from flooding rather than wind damage. Some 13 refineries and other distribution and import facilities have been affected so far. We'll keep you all updated here but, we just might all dodge a bullet yet. Question now is, if refineries are closed can other refineries around the US pick up production to meet current demand? Back in Katrina's time, refiners operated at 97 per cent capacity while, as of late last week US refiners operated at close to 86 per cent. Can they pick up the load and prevent a spike?

Update #3: According to Bloomberg, approximately 1.5 million barrels of production has been affected but damage to any refineries has been minimised as a result of the storm being downgraded in intensity. Gustav was originally forecast to hit land with a category 4 or 5 punch but weakend to a category 3 before hitting just west of New Orleans. Some sources are now saying that refining and production will be "back to normal within days". Still waiting on some word of any damage. Flooding could still be a problem as Gustav moves overland and close to other refining facilities close to the Texas border.

In the meantime, oil is trading down as a result of the news. If we hear of no damage in the next day or so, we can assume that there will be no need for any increase in pricing! This was a close one!

Good news and bad news…
Some prices up and others down

Media release

Conception Bay South, NL, August 12, 2008- Consumers in Newfoundland and Labrador will see some changes to petroleum pricing this week but, they might not necessarily like them. That’s from George Murphy of the Consumer Group for Fair Gas Prices.

“There is some disappointing news for the consumer this week. Twelve days data out of a possible fourteen shows that consumers of gasoline will be hit with a 2.5 cent a litre increase at the pumps while heating and stove oil users should see a decrease of slightly better than four cents a litre. I also expect that, with the heating-stove oil number pointing down, it may also be an indicator of the direction that diesel will be headed this pricing session,” said Murphy, researcher for the consumer group.

“Even though oil pricing has been down the past couple of weeks, we’ve seen an abject change in the value of the Canadian dollar, and that has cost the consumer in this country at least three cents a litre at the pumps and even more at the heating truck level in the last two weeks alone. Bad news was also reported from the United States Energy Information Administration when they reported a huge inventory draw against gasoline inventory as measured over the last two reporting periods.

“Oil pricing has been dropping for several reasons, any of which has had monumental impact these last couple of weeks. Demand for petroleum products in China dropped in July month by some seven per cent and the economy is showing some wear in the U.S, especially in the manufacturing sectors. The U.S dollar is continuing to gain some strength back against the Euro and investors are continuing to pull investments out of oil as that important hedge against inflation. We would be more positive about the latter if the Canadian dollar wasn’t so tied to the value of oil. It shows Canadians that they should still worry over high energy pricing this coming winter in spite of the drop in overall oil pricing; it doesn’t mean that the related commodity price will be down too.

“We’re still watching some world geo-political conditions out there that continue to affect the stability of oil pricing. As predicted here in the update some months ago, PPK rebels in Northern Iraq successfully attacked the export facilities in Ceyhan, Turkey and that resulted in a disruption in exports through the Mediterranean Ocean gateway. The situation in Georgia and Russia also promises to play into the markets of there is a disruption to exports although that may play more into European markets more so. The situation between the United Nations and Iran’s pursuit of its nuclear ambitions promises to be a contentious issue in the coming weeks as the United States pushes for possibly more sanctions and Iran’s insistence on the pursuit of nuclear power. We also have the sniffers out waiting for OPEC to pull the plug on some production this coming September if oil continues to fall in value.

“Waiting in the wings is also the weather. Remember that we’re into Hurricane Syndrome season and that means possible market plays against possible supply disruptions in the Gulf of Mexico. We are fast coming up to the three year anniversary of Hurricane Katrina and Rita and the national Hurricane center has also increased its prediction on the number of possible storms. It is promising to be an interesting couple of weeks and well worth watching.”

-30-

For more information, contact;

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

No change to pricing this week

If the price changes at the pumps this week, I don't have it. Even though we've lost some value in the price of a barrel of oil, we really haven't seen a large drop in corresponding spot pricing.

I've been a little busy with newbies in my family this last week so, it's been a case of putting some importance into other things that matter. Normally, I would have posted late last night or earlier this morning but, everything is being backed up here.

Anyways, before I get too far off the topic...

Numbers are showing an "allowable" increase in gasoline based simply on what numbers I have but not enough for interruption to pricing. That little tidbit is based on five of seven days needed to allow the interrupt formula to kick in. We may not get an increase now, but that doesn't mean we won't get it next week. At the same time, there's always some time for spot pricing to back off over the next week too.

In the meantime, heating and stove oils are showing a "down" scenario again. So far, the numbers are pointing down by a mere 1.1 cents a litre, albeit down none-the-less.

One thing I am noticing out of all this "oil dropping" scenario is this: The more we lose on a barrel of oil, the more we lose in value the Canadian dollar against the US greenback. That point so far, means that we can have a better chance of elevated heating and stove oil pricing this coming winter if the trend keeps up. The value of the Canadian dollar is a paramount factor in figuring out how much pricing will be on a day to day basis.

Watch it.

If the US dollar starts to gain value as it has in a couple of days trading last week, then the Canuck Buck will start to lose and consumers won't see the concerted drop in pricing that we've been waiting for.

The perverbial barrel has dropped from a record $147 US to today's $120 US. With that, we've lost a couple more hundredths of a cent because of an oil-based economy.

Regards,

George

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.”

-30-

For more information, contact;

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

First notice...

Numbers pointing down again

Funny title for an article I know...

More to come on this one but, just to let you all know, I'm tracking drops in gasoline and heating-stove oils from the tail-end of market activities last week. Numbers so far, are showing about three cents down on gasoline and four down on heating-stove oils.

Watch the blog Tuesday morning for more coverage on what these numbers will be. I'll have something a little more definitive as the days go by but, remember, anything can happen in the markets on Monday-Tuesday to strike a reverse in things.

Let's keep the fingers crossed...

Regards,

George

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.”

-30-

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

Don't look now, but...

If the latest numbers are any indicator, the price of home heating oil will most likely take its largest single summertime jump that I have ever recorded...

What does that mean?

In all likelihood, prices for heating and stove oils will take a jump up to the highest yet recorded for the immediate St. John's area to $1.29 a litre for the necessity. In other words, the Petroleum Pricing Office will have to use its interruption formula to adjust pricing.

Not saying it's going to be a definite here but, hey...Be warned...There's a strong possibility...

Blame this one on the speculators again...

Regards,

George

Numbers pointing down, but…
No big changes to fuel pricing forthcoming

Media release

Conception Bay South, NL, July 1, 2008- Consumers in Newfoundland and Labrador will be surprised to hear that there will be no large price change this time around when the Petroleum Pricing Office sets prices this coming Thursday although the numbers are pointing slightly down.

“Numbers here show that gasoline will drop by 1.5 cents per litre and heating-stove oils by 1.97 cents. Bear in mind that those numbers were for twelve days out of fourteen needed and oil has traded well up from last week which may have brought these numbers closer to a ‘no change’ or ‘0’ level albeit, still slightly down. We may have been victimized out of a substantial downwards move in prices by the rapid changes in the world geo-political situation in the last few days”, said George Murphy of the Consumer Group for Fair Gas Prices.

Reasons why prices are still up
“Continued tensions between Iran, Israel and the United States, supply disruptions that may result from the area along with supply disruptions in Nigeria continue to weigh on crude oil pricing. A falling US dollar and inflation fears also factored into the markets and help support pricing in spite of the promises from the United Arab Emirates and Saudi Arabia to help supply the oil markets with more product. The political situation in Libya and their promise to disrupt supply last week also didn’t help matters.

“Heavy investment continues in the oil markets as the US Federal Reserve continues to stay away from any rate increases that could help bolster the US dollar and also provide that important hedge to inflation fears. It remains a mystery as to why they haven’t raised rates.

Oil outlook for the winter not good
There is no sign of relief in heating and stove oil prices as the markets continue to trade distillates at record levels. Prices on the futures markets are also trading higher than last year and that means no immediate relief coming for users of those products ahead of September. It doesn’t help to see the markets trading distillates higher on word that diesel fuel has become the pre-eminent transportation fuel of choice. Heating oil continues to trade close to $4.00 a US gallon. If pricing doesn’t start to drop back soon, consumers can expect to start the winter heating season with pricing of $1.20 a litre possible.

Marine Atlantic rate increases could have been avoided
Consumers and industry could have avoided taking a hit from Marine Atlantic if the federal company had only implemented some fuel saving arrangements. Tons of fuel could have been saved merely by reducing the speed that the ferries cross the Gulf of St. Lawrence by anything less than a knot. Was it a case of increasing rates as a result of people wanting to get across the Gulf fifteen minutes quicker? If anything, the Marine Atlantic Gulf crossing should have seen its additional costs absorbed by the feds as it is an essential service. Does anyone know what Marine Atlantic does to practice fuel conservation?

Newfoundland Power rate increase to consumers
As a result of oil price increases, Newfoundland Power was forced last week to pass on rate increases to consumers based on oil-generated electricity costs. What should have happened was the provincial government, through Newfoundland Hydro, should have been made to absorb the additional costs to oil-generated electricity. While we can’t interfere with the private operations of the publicly-traded Newfoundland Power, the government could have changed the Hydro Act to get the crown corporation to absorb the oil hit to consumers. We know that Hydro is owned by us, but we still don’t have the power to dictate how it uses its money or its profit; Government does and we are the government. This was a totally unnecessary increase that caused an undue amount of hardship to a lot of consumers. We really won’t feel their full effect until the weather cools down again and we have a good chance of seeing additional increases as a result of the performance of oil. The price may be good for the government treasury but the consumer has yet to see the full benefits.”

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For more information, contact;

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