Oil up $4 US this week…

Refined commodity prices up slightly

Media release

Conception Bay South, NL, February 21, 2012- Consumers in Newfoundland and Labrador may be worried about rising oil prices, and they will see some slight changes to refined commodity prices this week. That news comes from George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

Oil prices up

“Oil increased on optimism that the Greek bailout will help Greece deal with mounting debt and secondly, people are optimistic that positive economic numbers show that the US economic recovery is underway. I don’t think that Iran’s embargo of oil sales to Britain and France really figured into things this week as total exports to the two Euro nation countries only amount to a combined 60,000 barrels of crude a day, hardly worth mentioning. However, the story of refined prices may not show itself here until next week, if the market trend from Tuesday continues,” Murphy said.

The numbers

“Refined commodities failed to move upwards any huge amount, but they were still up. Any increases to prices now are starting to add pressure to consumers. All fuels I measure are up, heating/stove oils by 45/100ths, diesel by 1.0 cents a litre, and gasoline up by 5/10ths of a cent. Keep in mind that there may have been some volatility in after-market trading hours that I cannot track. Monday’s close of the markets in the US was one such day.”

Muskrat consideration

“The Pub should have been mandated to look at all energy options in examining the scope of the Muskrat Falls project. The simple case in point here is the fact that Newfoundland and Labrador consumers have very little option in choosing the type of heat they would like to have in their homes and businesses, and therefore, consumer prices remain high as a result of that. In weighing in on any of the given options to consider, consumer choice has been left out and best pricing practice has been forgotten about. If consumers have the simple choice of natural gas as a central heating source, for example, it comes into competition with heating oil, electricity and wood heat. Right now, if you ask the consumer in a natural gas market if they’re getting a good deal, they’ll probably tell you a firm ‘yes’. That option for using natural gas as a future source of heating in your home is not being brought to the market, and that could be even more costly to consumers down the road. They are being cheated out of a lever that could be used in getting better prices for a consumer commodity.

‘Choice’ Is being taken away, and that could be another loss in going the Muskrat Falls way and failing to look at all the options available.”

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For more information, contact;

George Murphy

Group researcher/member

Consumer Group for Fair Gas Prices

Numbers up again

When will the consumer speak?

Media release

Conception Bay South, NL, February 14, 2012- Consumers in Newfoundland and Labrador will experience another increase in refined petroleum prices this week when the Public Utilities Board adjusts prices on Thursday. That news comes from George Murphy, group researcher for the Consumer Group for Fair Gas Prices and NDP Member of the House of Assembly for St. John’s East.

“I don’t know how far upwards prices have to climb before the consumer speaks by holding back on purchasing. Prices are out of balance with the realities of the crude oil markets and we should be seeing prices well below where they presently sit. I blame speculators for the move upward in the refined commodity markets”. Murphy said.

What’s happening with refined prices?

“Crude oil is up slightly this week by a rough two dollars US on a barrel and sit close to where they were during the first week of December of 2011. The kicker here is that refined prices for gasoline, for example, are close on ten cents a litre higher than where refined products were during the same week. Heating, stove oils and diesels are also trending up over the same weeks by close on five cents a litre for the distillates. There’s no doubt in my mind that there’s a concerted move afoot to make some quick dollars off the consumer, and the test of the consumers limits of patience in paying higher consumer prices.

The numbers this week

“As predicted last week, heating and stove oils are projected to increase by another 1.59 cents a litre, while diesel fuels are projected to increase by another 1.9 cents. Gasoline prices are projected to increase by 2.6 cents a litre. Keep in mind that the heating oil number is just a rough indicator but still is reflective of stove oil numbers. The same also occurs for the diesel fuel number as both heating oil and diesel fuels are reflective of a winter blend for which I cannot track without more information on kerosene in their mix. However, they are still a good indicator of those fuels direction in price change.”

Will the markets see a correction?

“Consumers are going to have to conserve and try to bring pressure, on a collective basis, to Big Oil’s investors. It will take a while for prices to retreat if consumers started tomorrow. In the meantime, it may take a drastic change to the present economic conditions out there in order for prices to return to something more affordable, and sustainable to consumers. Right now, there’s probably people out there whose patience with present pricing levels is beginning to wear thin.”

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For more information, contact;

George Murphy

Group researcher/member

Consumer Group for Fair Gas Prices

Twitter: @GeorgeMurphyNDP

Numbers still moving up.

What will it take to see pricing relief?

As speculators keep pouring money into refined product, it seems we're getting into the same runaway scenario we witness in early to mid 2008. Such was the time then when we were all exposed to a run-up in prices that saw crude oil finally enter the tailspin from $150 US a barrel.

Question now is: How long before we hit the wall?

Some stories out there are suggestive of $180 US a barrel oil by mid July, hardly likely with the world economy on the precipitous edge of economic recovery. If it does make it that high, look for cuts in manufacturing and production world-wide. I think we're close to a retreat, but the problem right now is how does it start?

Consumers are on the edge now. If prices to consumers do increase again this week, we may be at a early pivoting point. I just can't see how consumers can't spend in an age where just going to the grocery store is beginning to get expensive.

Surely, the market traders are realizing this?

I don't think so.

Here's what I have so far for this weeks price change, keeping in mind my numbers don't track volatility that occurs, and, of course, one day to go:

• Heating and stove oils show "up" by 1.68/Lt again this week.
• Diesel is also up by 1.9/Lt, and...
• Gasoline shows up also, but this time by 2.6 cents/Lt.

Back again tomorrow night, until then, or follow me on Twitter...

George

Twitter: @GeorgeMurphyNDP

Oil holding steady

Distillate prices up on cold European weather

Media release

Conception Bay South, NL, February 7, 2012- Consumers won’t see much change to gasoline prices this week, but the same can’t be said for distillate fuels as refined distillate prices continue to climb. That news comes from George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

What’s driving up distillate prices?

“Cold European weather is probably what is driving up refined distillate prices this time around. Record cold and the fact that European countries are the heaviest consumer of distillate-type fuels are combining to move heating, stove oil and diesel fuel prices this time around, and if the cold weather persists there, it may not be the end of it.” Murphy said.

The numbers

“Numbers show that heating and stove oils will increase by 1.05 cents a litre, while diesel fuel will increase by a penny. Gasoline prices are relatively steady, in fact showing two tenths of a cent down for this week. Keeping in mind my margin for error of three tenths, there may be no change to gasoline prices this time around.

Numbers for next week are starting to form already with distillates showing up so far by another two cents or so, with gasoline again showing hardly any moves, albeit upwards in the tenths of cents. Those preliminary numbers will change if the cold snap breaks. Keep in mind as well that this is very early and full data has to be collected before I can make a final guess early next week.”

Saudi Arabia to keep prices below $100 a barrel

Bin Talal, the CEO of Saudi Arabia’s Kingdom Holding company says that his country cannot allow market jitters over the Iran situation drive up oil prices above the $100 US a barrel mark. Market fears are such that traders believe that if Iran were to block the Strait of Hormuz over its nuclear program, then any exports from Red Sea ports will be disrupted, thus driving up oil prices.

However, the same belief cannot be said of Brent crude prices, which are a more widespread use worldwide, which are set to break $120 US a barrel. Some are saying that the Saudi’s are playing the $100 a barrel card to calm market fears over a possible sharp rise in crude oil this summer where prices are projected to trade for $180 US.

“I don’t think that $180 US a barrel is possible however. If that happens, we’ll all be witness to a collapse in consumer spending and a collapse in any economic recovery the likes we’ve never witnessed before, you can count on that!”

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For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

Twitter: @GeorgeMurphyNDP

Consumers should benefit

Natural gas not considered as a viable alternative?

Media release

Conception Bay South, NL, February 2, 2012- Consumers in Newfoundland and Labrador may well be the losers because the government is failing to consider the use of natural gas in electrical power generation. That news from George Murphy, group researcher for the consumer Group for Fair Gas prices and NDP Member of the House of Assembly for St. John’s East.

“In consideration of all the alternatives, the province did not look at the use of natural gas in the generation of electricity, and that could prove to be a bad move for everyone, especially the consumer of heat out there. Besides using it for electrical generation, it would have given consumers another choice in what type of heat they could have been using.” Murphy said.

“There’s several reasons why we could have used that type of thermal generation, none the which could have been that it is Kyoto compliant and relatively clean burning. We could immediately stop the emission of almost 500,000 tons of CO2 and SO2 by-products by making the choice of natural gas. The thermal choice the government is making still keeps the province tied to oil. Right now, I have testimony from places like Alberta and Saskatchewan talking about $60 and $80 winter heating bills, while we have consumers here paying a fortune for heating oil. The choice of an alternative heating source is being taken away that would have also seen a drop in demand for electricity as a result of people converting to the use of natural gas.”

“We could have used gas as a way to start in on a natural gas royalty regime that would not only have brought money into the provincial treasury, but would have been a form of municipal funding as well. Any centre I looked at also put a municipal fee on the gas that means possible lost revenue at a time when municipalities are crying out for it. I won’t even get into the fact that we could have used natural gas to attract industry to the island portion of the province or to coastal Labrador with the development of natural gas fields close to shore there.

“According to Dr. Bruneau’s study of 2005, his numbers equate to natural gas electrical generation as being equivalent to 5 cents a kilowatt hour of electricity, whereas Muskrat falls is quoted as being anywhere between 14.3 and 16.5 cents a kilowatt hour. Why are we not exploring the option of natural gas development? Why is the province anxious to sell costly electricity to us when we could have cheap energy that would attract people and industry to the province rather than see them go the other way because our cost of living is higher?”

“Consider this: If people change their way of heating to natural gas instead of electricity, then you save on the consumption of electricity for heat, thereby dropping demand for electricity in the first place. The price would come down. We get to save our water resources and we still get a new anchor for thermal generation off oil dependency. And because there’s more electricity capacity on the island, you need less wind energy to supplement.”

“I just think that we’re losing out. We have a chance here to save consumers a small fortune, turn what is essentially a waste product into dollars for everyone, generate new revenue for all forms of government and do something positive for the environment at the same time. We have enough gas, according to Bruneau, in the discovered fields of Hibernia, White Rose and Terra Nova to last a hundred years, and there’s other reserves off our coasts, particularly off Labrador. Why isn’t natural gas being considered as a viable option? I think we’re missing out on an opportunity for people out there to keep money in their pockets.”

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For more information, contact;

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

Twitter: @GeorgeMurphyNDP

Wading into Muskrat Falls
Why not natural gas or wind as options?

Why hasn't the use of natural gas not been talked about as a viable option to Muskrat?

Wasn't it government's contention to get our fingers dabbling into the natural gas markets? Wasn't there some interest being generated in the possibility of getting gas onshore here? (remember FOGO?)

My role with the Consumer Group for Fair Gas Prices involves trying to save the consumer out there a few bucks, and to try to keep everyone up on heating options, besides prices. So, I do a little comparison of prices between heating oil, Muskrat electricity prices and natural gas.

Consider what I found out, and I would caution that some data I got was off some natural gas companies sites, like Heritage Gas in Nova Scotia and Saskenergy in Saskatchewan, and some of what I have thought of comes from myself. Some prices here come from some of these natural gas companies own calculations, while others, come from people who volunteered energy costs to their households.

I even went as far as to email some people I know just to see what they're paying in comparison to others who use different types of heating, like oil.

The first thought I had was that, according to the Bruneau study on gas onshore, it can be done at a cheaper cost to the province over what is being proposed under Muskrat. According to Bruneau's study, in 2005 dollars, we could have natural gas generated electricity onshore for somewhere in the area of a billion dollars, while the Muskrat proposal costs are ranging $6.2 billion, not including cost over-runs.

But here's what else we get, if we bring in natural gas, and what else we can do with it.

Consider the facts on natural gas itself.

• 
  
  Natural gas prices are predicted to be very low for at least the next ten years as inventories of gas are constantly being increased. Just mention fracking, and you know where the future price is going even after that. They may increase slightly, but nothing in the order of what they're predicting for oil prices, for which I also have doubts.



• 
  
  It's cleaner than Holyrood and Kyoto compliant. I live under the stacks of Holyrood now, and I would love to see it gone myself.



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  We open ourselves up to using wherever the gas comes onshore, to use the location of it as an anchor-point to the possible export to other markets. Would we take a line and run it further to connect to the North American gas grid, for example?



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  Natural gas price equivalent to heating oil? Yes, if heating oil was 54 cents a litre, prices for natural gas could be compared to that.



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  Compared to electricity? Natural gas equals 5.1 cents a kilowatt hour in Nova Scotia. 7.1 cents in Saskatchewan.



• 
  
  If natural gas was also opened to be sold in Newfoundland and Labrador, how much of an effect on other energy prices would there be? I would think that home heating oil prices would come down in response.



• 
  
  Consumers would remove themselves from electrical consumption for heating purposes, considering cost factors alone. You would have more electricity on the grid because of less consumption of it, and prices should also come down in order to compete with natrual gas heating. The utility market would have to try to save their market share.



• 
  
  We open the province's treasury to royalties on the sale of natural gas, IF we had a gas royalty regime in place.



• 
  
  Industry gets attracted to cheap heating costs.



• 
  
  We get a modern and up to date natural gas thermal station that will need a whole lot less maintenance than Holyrood is said to be costing.



• 
  
  In a non-demand season, where the natural gas would not be burned, we could sell it on the markets. According to Bruneau, we now have enough gas in the present oil fileds, to last us well close to a hundred years.

• 
  
  The fees for service brings in new funding measures for municipalities. Look at someone's natural gas bill and most have a 3% municipal charge.
  
  Why not wind as an option?

A story on windpower cost on BNN the other day caught my ear...

The gentleman was representing a company called "Western Wind Energy" and stated how costs for alternative generation methods, like wind and solar, are getting cheaper by the minute and will continue to get cheap as other countries become more adept at the production of the technology. He also further stated that wind power can be installed and produced by Asian companies now for $1.2 million a megawatt. If that is the case, what's the rush to get Muskrat up and running if we can get power at a cheaper cost?

I don't know if it's just me, but when I look at a heating bill from Alberta that tells me a three bedroom family home in Calgary only paid something in the order of $130 for a months heating, I'm asking myself why we're not looking at all the options.

Again, besides the fees, I get a note from a friend in Saskatchewan that tells me he just paid $60 for his heating, I have to ask again why natural gas isn't being taken as an option. Yes, let's be responsible and ask about all the options before we rush into a hurried decision.

The right choice could save consumers here thousands in heating costs, and the wrong one could cost us the opposite...

Let's look at it.

Let's look at it all...

Regards,

George Murphy

Markets still in flux?

Refined commodities increase in price

Media release

Conception Bay South, NL, January 31, 2012- While oil prices remain relatively steady, consumers will still see a slight increase at the pumps. That news comes from George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Investors have found a new playground for now. They’re not making money off the refined product because no one wants to completely shut out the economic recovery, but they’re forgetting that they’re picking consumers’ pockets by doing what they’re doing.” Murphy said. “The market news is not reflective of where reality to consumers should sit. Oil prices are down a buck a barrel this past week.”

The numbers

“Numbers show that consumers will see a slight increase to distillate fuels. Heating and stove oils show an added 62/100ths of a cent, while diesel shows an added half penny upwards. Gasoline shows an added two cents a litre upwards, probably motivated by a slight drop in inventories last week.”

European union problems make a play

Waiting in the wings is the financial situation in the European union that still will make a play should European leaders fail to reach an arrangement on financing Greek debt, or should Greece default. Other EU countries have since faced a downgrade in their credit ratings as well, with Belgium, Portugal, Italy being some of the countries that face the placement of heavy austerity measures that could curtail consumer spending. The financial situation may also be to blame for the latest numbers on unemployment in the EU member nations. Unemployment hit a new high of 10.9 percentage points today.

Iran set to cut exports

Iran is set to cut exports to the European Union, all in spite of the European Union placing an embargo on imports from the Middle East country, but it’s not that Iran is too worried about exports. Reports indicate that India will still import Iranian crude oil, and that China and North Korea will again probably pick up the load left by the Euro nation countries. Hardly to be effective, the start of an embargo will hardly damage prices. Iran exports almost 450,000 barrels of crude per day to the European Union, probably not enough to play into prices. It’s the promise of any disruption of exports through the Strait of Hormuz and any disruption to exports from other oil producing countries in the Gulf that will play heavier into prices.

OPEC numbers are out

Just how much oil is out there?

Take these numbers into consideration. OPEC January production reached a three year high of almost 30.9 million barrels per day with Libyan production now at 925,000 barrels per day, just short of the pre-war export level of 1.5 million barrels. Saudi Arabian production ranged 9.65 million barrels per day in the same month. Nigerian production was set at 2.1 million barrels, in spite of some disruption with ongoing tensions in the African country. Production disruptions have caused a slight drop of close on 80,000 barrels a day there.

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For more information, contact;

George Murphy

Group researcher/member

Consumer Group for Fair Gas Prices

Twitter: @GeorgeMurphyNDP