"Nothing doin" budget for gas or heat users

Seems that every budget day, motorists in this province, and indeed across the country, are feeling a little left out when the good times are rolling.

Such has been the case for both the federal and provincial budgets, both of which were abject disappointments when it comes to some form of pricing relief.

Neither budget adressed the issues of high taxation on a commodity that has experienced rapid increases that far outweigh the rate of inflation. Prices aren't going to ease anytime soon either, in case you were wondering. My numbers are still reflecting anywhere between $1.22 to $1.31 a litre for regular unleaded gasoline by the first week of July here in Newfoundland and Labrador.

Here in Newfoundland and Labrador, gasoline taxes amount to almost 16.5 cents on a litre while the sales tax component averages half that again. Last year, the province collected close on $142 million in motive taxes and only invested close on $66 million back into road and ferry infrastructure, a far cry from the amount collected neddless to say.

Is this fair?

I think not...

If you're going to collect a tax for a specific intent, then collect it and SPEND it for it's intended purpose. Don't tell me that the people of Labrador aren't worth hard surface instead of a chip seal experinment. Don't tell me that the province has to wait for something to happen in the west bound lane of the Harbour Arterial road before proper dollars are spent and we see a full accounting of road work...

Heating oil users in Canada this coming winter are going to be in for a shock when they go to fill their tanks. We're not seeing spot prices fall back in the non-demand season for the fuel when it should be. Spot prices are now just slightly below those of last year and just aren't falling back the way they used to a couple of years ago.

Spots for gasoline exceed those of May month last year by something like four cents a litre.

Call me crazy... But in yesterdays budget, would motorists and energy users be better served by a tax break on any motive fuel and a complete removal of the province's taxation component off all forms of heat?

If the province wants to preach about taking charge of it's own house, then why didn't it start with breaking the HST Agreement of 1998 and enter into a "control" of it's own fiscal regime? Why can't we call our own shot on most taxes here in the province and give everyone a break on taxes that are collected at the sales tax level rather than the income tax level?

It sounds a lot easier to do that across the board rather than see income tax breaks that rival the equalization formula.

Income tax or equalization. Can any of us figure out how either works?

Maybe budget time should be turned into something tangible next time. You know...Something we can all sink our teeth into...

Regards,

George

Answers from natural resources minister, Gary Lunn

Last month I told you all about a letter I wrote to the natural resources minister in the light of supply failures in Central Canada and what should be done in Canada as a whole, to answer the supply situation.

That can be found in my March 05, 2007 posting...

The letter was also intended to serve to set up an energy clearing warehouse and an inventory reporting system much like the "Energy Information Administration" in the United States.

Here's his reply dated April 12, 2007...

Dear Mr. Murphy,

Thank you for your recent letter regarding the tight supply of gasoline and related commodities. I appreciate the opportunity to respond to your questions and concerns.

I realize the difficulties caused by the recent fuel situationin Ontario.Throughout this period, Natural Resources Canada (NRCan) has worked closely with industry and the province to monitor the situation and do whatever was necessary to ensure adequate supplies were available to consumers. In addition, I certainly understand your concerns and those of other Canadians with respect to the negative impacts of increases in energy prices. Higher prices for these and other important commodities raise the cost of living for everyone.

While it is true that the Canadian refining sector has undergone significant rationalization in the last three decades, Canadian markets remain well supplied. Changes in the industry served to make the market more cost effective by closing down small inefficient facilities, which could not have been economically retrofitted to acomodate Canada's cleaner fuel standards and replacing them with new larger installations. Today, canada has more than double the refining capacity at its 19 refineries than it had when there were 44 refineries in the 1960's.

Although the economics would favour new capacity additions, there are a number of competing priorities for these investment dollars. Refining is a capital-intensive business that requires ongoing investment to remain competative. Over the last decade, most new investment dollars have been spent on refinery modifications to implement environmental initiatives and regulations, and to reduce energy intensities.

Industry decisions to construct a new refinery will be based on the perceived long-term economic returns. The slight increase in profit margins that refiners are now seeing is creating an incentive to invest in new capacity. Currently, Shell Canada, Irving Oil and Newfoundland and Labrador Refining Corporation have put forth proposals to build new refineries in Canada. Other companies are evaluating the possibility of expanding current refining capacity. However, these initiatives will take several years to be realized.

Although consumers in Southern Ontario were inconveienced by the decreased availability of petroleum products in February and early March as a rsult of refinery problems and distribution issues, there was always enough supply to meet the demand. This reflects the fact that all suppliers maintain inventories to bridge supply gaps when such unforseen events occur. Companies will always be cautious in drawing down stocks at the onset of a problem until the arrival of new supplies is more certain. Companies always ensure that they always maintain sufficient prduct to supply emergency vehicles and essential services.

Throughout the last few weeks, the government of Canada has worked with the industry and the provinces affected to mitigate any shortages. The Government is committed to ongoing collaboration with all interested parties to ensure adequate supply of petroleum in the interests of all Canadians.

Canada's energy policy continues to have its basis in a freely functioning , open market where companies are free to make business decisions within the regulatory framework that is designed to protect current and future Canadian interests. We consider that prices set in free and competative markets represent the best signals to producers in terms of their investment decisions, and to consumers in terms of the type of energy they use and how they use it. This helps to ensure that sufficient supplies are available at the most competative price.

Statistics Canada collects and compiles a wide variety of petroleum data relating to production and consumption. Tjhis data is available publicly through Statistics Canada's monthly Supply and Distribution of Refined Petroleum Products in Canada publication. The latest addition is available at the following web site:

http:www.statscan.ca/bsolc/english/bsolc?catno=45-004-XWE

For further weekly petroleum pricing, information on oil and petroleum product markets and ways to manage energy costs, I encourage you to visit NRCan's Fuel Focus website at www.fuelfocus.nrcan.gc.ca.

Again, thank you for writing on this important matter.

Yours sincerely

Minister's signature

Prices to drop slightly...

Nothing to get excited over when "supply and demand" are manipulated

Looks like consumers in Newfoundland and Labrador will see some kind of relief, but it's nothing to get excited over...

Gasoline should drop by something in the order of 6/10ths of a cent while stove oils should drop somewhere in the order of 3/4 of a cent on a litre.

Continuing draws against inventories, consumer demand are among the factors. Look as well to Nigeria, Iraq, Iran and the list goes on...

Look at refiner capacity though, when you think about draws on inventory. I look at those numbers from the Energy Information Administration on a regular basis and what they see is not what is reported to the consumer in such a way as to be understood.

There is a "fine line"...

See...It's like this. When I see that refiner capacity is down and I see that the consumer is drawing on present refined inventory, it's only normal to assume that pricing on any product will go up. In this case, I think that Big Oil knows that and plays with "capacity" on a regular basis.

Why wouldn't they?...

If you knew that everyone would pay more for a product if you slowed down production, wouldn't you slow production? That means you could save on labour, electrical costs and, in general improve on your bottom line-your shareholders would love you for it.

You know that the world is thirsty and you know that you have what they want. If you can hide behind the excuse of "maintenance" then why not? Seems like refinery maintenance takes longer than it used to. It's been several weeks now and no great increase in "capacity".

Either way we look at it, the rules of "supply and demand" have been successfully manipulated and there's no Competition Act in Canada to protect the consumer from that.

Regards!

George

Price for gas to increase in Newfoundland and Labrador

Houston, we have a problem...

Unlike the Apollo mission those many years ago, what we are witness to is a supply/demand market that needs a little oxygen, something it hasn't had in a long time...

Newfoundland and Labrador consumers will be subject to another increase at the pumps come this Thursday morning. Another 3.4 cents on a litre to be exact.

Stove oils are pointing down only slightly, with 13 days out of a possible 14 days measured. That could even be gone by the end of the day barring any divine intervention, not likely to happen with Easter gone!

Heating oils and diesels may in fact, show no appreciable change as a result of seeing early interruption last week.

Here's what's bugging me this time around though...

For a while now, I've been hearing refineries speak about shutting down for some needed winter maintenance ahead of the demand season for refining gasolines. They've been shut down for a while now, almost six weeks since I heard the first of them switch-over from distillate refining to gasolines.

That's an awfully long time considering some of the early turn-arounds I used to hear about some years back but, this time is more unusual than most.

While it's true they need some time to do their maintenance thing, should it be true that they should do it in the time that used to be set aside for the building of gasoline inventories? Because there is a drain on gasoline inventories at a time they used to build, consumers will have to pay higher pricing this coming summer as a result.

All the companies had to do was switch the time they did the maintenance thing, and we'll get to pay for it!

It's at that time of year as well, when they start on gasolines, that they build distillate inventories. Let's see what they do with those this summer and fall.

Regards for now,

George

Possible interruption to heating,diesel and stove oil pricing

From the look of things and the markets this last week or so, it looks like Newfoundland and Labrador consumers will probably be looking at possible interruptions to all distillate-type fuels.

As of the last six business days since the last adjustment, I have numbers that show that stove oils will take a 4.32 cent per litre hike. Like I said, that's over six days.

The Public Utilities Board needs a seven day fix to determine pricing adjustments.

As of today, we'd still have to see a substantial drop in distillate trading on the markets. Breaking news from the Middle East shows that Britain is looking at getting a negotiated settlement with Iran and that's starting to show on the distillate markets. Question here is: Is the trading day drop going to be enough to thwart any need for upwards adjustment?

In order for a "no adjustment scenario" on stove oils, we'd have to see the price come down by something in the order of 1.4 cents on a litre. As of 2:45pm Newfoundland time, that number was 1.2 cents a litre-perilously close to my margin for error!

Diesel, heating oils and stove oils are all part of the distillate group of fuels so, just because I only have the numbers for stove oils, it doesn't mean that we won't see adjustments to the other fuels like diesel and heating oils.

I'd be more inclined to fill the tank rather than let this one slide. Numbers are up enough that, if we don't see them increase tonight, they will possibly go up next Thursday anyways.

Regards!

Gas "up" but heating down...

Well...Now that we're starting to get winter behind us maybe we'll start to see something "constructive" happen with heating and stove oil pricing.

I can't say the same thing about gasoline, although it could have been a lot worse than what I'm seeing out there. Consider the world situation before you assome we might get a break at the pumps though, because we're not.

So far, with another business day to go before we see prices adjusted, we're looking at around a cent up on gasoline.

Stove oil prices are starting to nose down a little, around 1.55 cents a litre down for this adjustment period.

That's about 5.8 cents a US gallon down to our friends south of the border.

Like I said, that's with 13 out of 14 days recorded. I'll have a "definitive" on Wednesday morning.

So, what are we looking at out there?

We've had some more fires at refineries again, this time a couple in Indiana of all places. I'm just waiting to hear of a loss of life at refineries as the oil companies try to keep the dollars ahead of demand. I can't wait to hear a Big Oil company explain to the media why it wasn't pratising good safety measures when their refinery blows up. Keping ahead of the supply/demand curve is getting to be a chalklenge that Big Oil is finding hard to meet. Unfortunately, we get to pay more for that notion.

Inventories are getting hit hard as a result as well. Consumers still haven't seen a brick wall on pricing, although this increase isn't a substantial one, it still signifies we have a way to go before consumers realize they're being tagged for their own consumption, far beyond the actual value of the stuf they're putting in the tanks. We are, in fact, the authors of our own demise on pricing.

The more we ignore the rise, the more apt we are to make a heavy impact on inventories, which means?...You guessed it..the more we impact the price.

$1.13 and change might not sound like a lot to consumers elsewhere like Europe, but it sure is a heck of a lot here, and it's going to get worse.

See, this is the season when, directly before the summer deand season, we see increases in gasoline inventory, in spite of refinery shutdowns.

Not this year...

I think this is the first year I have seen in my ten years of analysing pricing that gasoline "user season" has actually matched the demand for distillates in the winter season.

Another analogy and a little prediction too. You are going to witness the summer season become matched to the gasoline demand season. Why?

Jet fuel demand is up and, if the economy remains strong, distillates like diesel will be in hreavy use just to keep the goods moving to eager consumers.

When the tractor trailers move, pricing does too.

That means a higher starting point for which heating and stove oils have to begin the run-up in pricing for next winter. Not enough time to build inventories and a strong demand.

Could be a cold one for some...

Lastly. Keep an eye to the Iran and United Nations situation, all over Iran's "want" of a nuclear program. They think they have the right to produce energy by nuclear programming while the world outside of the Russians and China seem to think they don't. The "arrest" of 15 British sailors from the HMS Cornwall in the Persian Gulf will also start to figure on pricing as the Middle East again heats up bringing pricing up along with it.

See what happens on Thursday but pass the word for now...

Regards,

George

Equalization hullabaloo

The realities of the equalization pact between provinces and the federal government are specifically for one purpose; that of getting provincial governments off the "welfare" roles and give them the opportunity to prosper using the resources they have at hand, new or old.

What the latest Tory government program has said to Newfoundland and Labrador seems to ride hand in hand with any governments policy on welfare or employment insurance; "You've got yourself in a position where you can make an abundance of money so, it's time to take you off the welfare roles".

Far be it for me to say that, perhaps we have come into the future because it wouldn't be politically correct to say that. This equalization program that has put the "screws" to Newfoundland and Labrador comes hand in hand with what we are told is happening to our offshore resources, that we are seeing big benefits from our offshore resources. While we hear the provincial tories saying that it's all good here on the Rock, the federal government seems to recognize the fact as well and that seems to be whats got the "bee in Danny's bonnet".

The whole purpose of the Atlantic Accord was to advance the offshore industries to the point that we could see the ultimate benefits like Alberta does, but the irksome realisation is that we can't see that for the forest that has grown before our eyes, created by the present administration in the province. It was Brian Mulroney who said that he "wasn't afraid to inflict prosperity on the people of the province of Newfoundland and Labrador".

Maybe the feds really weren't afraid to do it. Maybe we were afraid to accept the reality that we would profit by the offshore accord signed in 1985.Are we afraid of seeing the money come in? Are we getting paranoid of making deals so much that we can't accept the status quo on this one?

I don't think we got the screws on this one. I think we saw the premier put the screws to us. He hasn't signed a deal and time is running out now on the Atlantic Accord. The reality is that the Atlantic Accord could be a story of lost opportunity five years from now.

How so?....

It's like this. Had we seen the other offshore fields progress to the point that they were bringing in untold revenues, would we really care if we had to receive equalization again?

That's the question that none of the Try provincial politicians seems to want to answer.

Are we afraid of making a deal?

The Offshore Oil Industry is now on Life Support

...but, what do I know about the oil industry...

So, I'm thinking after reading the Globe and Mail article that, maybe the offshore oil industry has just been put on life support.

Hibernia South...Hebron-Ben Nevis...

We don't have a fishery that would be worthy of the inshore fisherman to talk about. The economic powerhouse, the center of trade for large fishing companies that was St. John's, was thrust inexhorably into the oil industry just a short 25 years ago, with oil rigs punching holes in the seabed some 200 miles out in the search for "light-sweet".

Houses bloomed in areas where we tore down the trees and then named the subdivisions after wood groves of them. People from distant countries who were used to starting up the engines of oil-based economies moved here and set up home, wives shopping at the malls while the men in the suits worked in the "towers" of the old, musty, fish-scented downtown core.

There was hope in some of those buildings, and in the buildings where the politicians fought, that "have nots would be no more",... that "I'm not afraid to inflict prosperity on the people of the province of Newfoundland and Labrador"...

I guess after today, we may have found out that someone in the Confederation Building just might be afraid to inflict prosperity on the people, huh?

Today, Exxon-Mobil packed up their dinkies and they're now heading out to play with some other kids in their sandbox. Today, we found out that Exxon-Mobil has written off their offshore interests until sometime after the year 2010.

For some reason, I think my property here in Paradise just lost a couple of thousand dollars in value.

Can I sue for that I wonder??

They've parked a project that could have brought Newfoundland and Labrador off transfer payments and we wouldn't have given a damn if the federal finance minister had paid us a visit again...

Now that we won't have those revenues, those offshore jobs, those economic spin-offs from the industry, well....I guess we just found out that the province just hit the brick wall and we'll all be saying "good-bye" at the airport a few more times yet.

And, I guess we'll be seeing a whole lot more of the federal finance minister again...

Faint hope, I guess...

Letter to Natural Resources minister of Canada, Gary Lunn

Here's a copy of the letter I sent to Natural Resources Minister, Gary Lunn the other day. I figured i would list this one as a matter of interest to consumers in Canada and the United States.

Feel free to leave a comment...

Mr. Gary Lunn March 05, 2007
Minister of Natural Resources
Government of Canada
House of Commons
Ottawa, Ont.
K1A 0A6


Dear Mr. Lunn,

I am writing to you in the hope of expressing concern for the ongoing shortage of gasoline and related commodities and, in the hope I may be able to share my years of research with a small synopsis of the situation as well as possible solutions.

I also hope to share some possible solutions to the problem in the hope the Government of Canada may formulate policy to avoid such troubles in the future, as well as have the present problem solved. I have some nine years experience in learning about the workings of the oil companies as well as becoming quite knowledgeable on all aspects of how pricing to the consumer is performed.

As you well know by now, the Imperial Oil Nanticoke refinery in Ontario suffered a fire which drew Imperial’s refinery capacity out of an already stressed marketplace. That, in turn, has helped work pricing up on a consumer level that some find unbearable and others, like tourism industries, are showing concern for the summer season.

High prices, as we well know, not only hinder the economics of the country, they hurt the spending of the Canadian consumer. They show restraint and that’s not good for business in the country. Consumers want to know that there is “fairness’ in the marketplace and not an edge to one group or the other. We recognize the right of business to make a profit on an even playing field as well as recognize the need for petroleum-based product that the rest of the country may require in the future.

The problem that the Imperial Oil refinery closure caused was the straw that, effectively, broke the consumers back and it was a rude awakening to the capacity problem that the consumer faces in this country. While we lost a refinery in central Canada, prices have been affected in all reaches of the country and on world and North American markets.


While it wasn’t the only accident we saw in North America over the past couple of months, it was enough to add some stress to an already stressed price on the markets for refined gasoline product. This is the highest wintertime gasoline spot price I have recorded since first taking stock of price trends and the highest starting point for prices leading up to the summer driving season.

The writing is, effectively, on the wall for high pricing this season barring any unusual circumstance like economic collapse or very strong inventory builds.

What this refinery shutdown tells me are several things that I hope government will consider for future policy. These suggestions may seem to be controversial and will probably be susceptible to others who know slightly different. A lot of these suggestions will also work in the long term because they become the impetus by which consumers and industry get to both build, and conserve.

Here are several suggestions of which I hope you can consider:

The lessons of the shortages in gasoline have told us that this country has no grip on how much Canada consumes as a country. It also tells the consumer that we consume beyond our means and are only limited by how much Canada can produce. Bearing that in mind, the Government of Canada should immediately take steps to create Canada’s own “Energy Information Administration” that includes:

Mandatory reporting and publishing of available refined product by type.
Mandatory reporting and publishing of crude oil data and inventory.
A weekly summary of crude supplied to the markets.
Numbers to substantiate crude oil exports.
Numbers showing refined product exports by country and quantity.
Numbers that show available Canadian refinery capacity.
Numbers that show available refined inventory data by area of the country.
Show data for all petroleum products used in the country including natural gas.
Include daily postings via the Internet of cash petroleum pricing of all petroleum products.

These are just a few ideas for this new branch of the Natural Resources department should entail.

What effectively happens is that the country becomes more aware of what it consumes and the traders on the New York Mercantile Exchange and others, become sensitive to the availability of Canadian supplies of petroleum and related products. If Canada has ample inventories of product that is supplied to protect Canadian consumers’ needs, and there is extra on hand, then these refined products can become a wedge to drive prices down on the markets. Traders speculate on available inventory in Canada as well as their own market.



It would not be likely that, should Canadians see inventory of product in Canada protected for the interests of Canada and Canadian business, pricing would rise or be excessive to the consumer. If they saw on a weekly basis that inventories of product were dropping, and that pricing may be affected on the interim on the markets, they would be more likely to save and practice conservation to prevent any increase in product pricing. Mandatory reporting on the part of the oil companies in Canada, along with data gathering by personnel of the Natural Resources department, will also help oil companies gauge what and how much to produce from month to month. This has an immediate impact of saving a refinery’s energy and helping keep Canada’s environment a little cleaner.

Industry, particularly those that use heating oils and natural gas, will likely be able to track pricing and available petroleum inventory and make judgmental decisions on what type of heating fuels to use on a yearly basis as industry does in the United States. They make decisions on what type of fuel to use based on long term costs to their factories.

In closing, the government of Canada also has to put in place a mandatory moratorium on any further closures of refineries in Canada until it can figure out how much Canadians are consuming versus the refined product that is produced in this country and available to the Canadian consumer. Nothing else is asked of this country besides looking after the consumer environment as well as his or her future needs as well as those of Canadian industry. Ironically, it was a closure of the last refinery within Canada that may have put the industry itself on a tenuous road to problems for the consumer, that refinery having closed in Sarnia, Ontario just within the last two years.

The Government of Canada must take the steps to recognize its own citizen’s needs as well as those of future consumers of petroleum products. It also has the duty to protect as much of the resource as those citizens will need in the future. That responsibility should include environment concerns balanced with the needs of Canadians first and it has to become the lever against traders in the U.S marketplace.

These thoughts are also available in a report I made to the Standing Committee on Gasoline Pricing in Canada some years ago. If you desire a copy of that report, please let me know and I will forward a copy to you via mail or via email.


With best regards,

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

Don't look now!

Nova Scotia, New Brunswick and Newfoundland and Labrador to see

increases this week!

I'd rather you all get some kind of notice than none at all.

Truth of the matter is that everything is pointing up, although it looks like heating and stove oils won't be a part of what has been happening this time around.

With a couple of more trading days to go, Newfoundland and Labrador will most likely see Early Interruption to pricing.

Too early to say exactly how much but preliminary numbers are suggesting as much as an 8 cent per litre increase could be on the way.

I'll have more sometime Wednesday morning on this one...

Keep an eye.

Why you will be paying more for fuels in the future

Tonight, the people of Quebec have been victimized by Big Oil and our own gluttony. As consumption continues to increase at an alarming rate well above last years level, we have seen refinery fires in North America.

Thursday morning, the people of Newfoundland and Labrador will wake up to an added five cents a litre at the pumps to help put the fires out...

Were they caused by just ordinary accidents?

While no accident should be considered ordinary, I cannot help but think that consumer consumption may have been a marked contributer to what we have come to witness in Ontario and Quebec.

Our own gluttony for gasoline and the Big Oil policy of shutting down refineries to gain control of supply and demnd, has finally come home to roost for the consumer. While we burn it for Big Oil, have we also put them under pressure to meet that consumer demand? Have we become that thirsty for gasoline and their related commodities, that we have become the cause of the problem in the first place?

We have also become complacent in letting Big oil close refineries in the first place. Several refineries in Canada have closed over the past few years, the latest being a PetroCanada facility in Sarnia a couple of years ago. Some 18 refineries have closed since the early seventies in Canada and, have we seen demand decrease in that timeframe?

The answer is "no".

Fewer motorists existed than exist now and we have become a generation that has moved from trains to highwways and tractor trailer transport. While demand has increased, overall production capacity has decreased over the same time period.

Until you hear that Big Oil is going to increase the number of oil refineries, or that the number of drivers on the roads are going to drop, then we will be facing the prospect of ever-increasing petroleum pricing for the next generation to become witness to.

Maybe it's time we move back to the barn?

Prices moving upwards

Stay tuned!

This picture, from the Canadian Press, shows a refinery fire at Imperial's Sarnia plant in December, 2006.

Might have been surprised if I didn't see some sort of a market ploy to get prices moving upwards again but, there we go. We're going to see the screws put to us again compliments of the traders on Wall Street.

Newfoundland and Labrador's turn is coming this Thursday as we'll be watching the pricies roll over at the pumps. While a little early to predict, so far, the numbers are showing an allowable 4.5 cents up at the pumps for gasoline.

Nova Scotia and New Brunswick got hit the other day and other regions are experiencing upwards moves by Big Oil.

The causes?

A refinery fire in Sarnia(above), the CN rail strike has contributed to shortages, another two refinery fires south of the border, Iran and it's pursuit of a nuclear program, ongoing inventory concerns, colder weather....

Shall I go on?

I'll have more for everyone on Tuesday Night/Wednesday morning so, be looking for the media announcement and the email release with the official numbers. There will be an increase but, it could range a little higher than this number with a couple of more trading days left.

I don't expect any miracles, though it's nice to see some divine intervention now and then.

Keep watching!

Possible attacks on Canadian Oil facilities?

Don't laugh...It's possible!

I was disturbed that a branch of Al Qaeda has seen fit to recognize the importance of Canadian oil to the economics of the United States and how important our oil industry is to the U.S.

The story first broke yesterday on CTV News.

A couple of years ago I asked the same questions about security around the North Atlantic Refinery in Placentia Bay, the facilities in downtown Halifax owned by Imperial, and in New Brunswick owned by the Irvings.

I don’t think anyone took me serious then.
Then along comes this posting by the terrorist cell.

If anyone thinks there is little concern, let me refresh their memory on who this group is and what their capabilities are.

Twice now, to my memory they have attacked the Ras Tanura oil facility deep in Saudi Arabia.
The first time was with a small group of terrorists that tried to get into the facility and attack both foreign oil workers and the refinery system there.

The second time was with a larger group of people who also failed in their attempt to disable the facility. Both times, small weaponry was used but still with the loss of life.

The third time they try they may very well succeed. Any successful attempt at bringing down the facilities at Ras Tanura would possibly remove nearly 6.6 million barrels of crude oil a day from world markets.

While knocking out the North Atlantic Refinery would be miniscule in the world scale of refineries, its removal from the markets would have enormous economic impact-not just because of the fact it is a refinery, but for the fact that an economic target was successfully nailed by a terrorist group within North America again.

I won’t even get into what the ramifications are for the economy, let alone fuel pricing.

If these companies are going to take this threat lightly, they’re headed for a world of trouble.

There is nothing so dangerous as a determined enemy.

Look out!

Pricing pointing up

Consumer beware!

Since January 18, 2007, we saw crude oil reach a low of $50.47 US a barrel. You just knew it wasn't going to last long.

You'd be right if you guessed upwards movement is coming to consumers in the coming days...

Numbers so far, are showing an allowable upwards movement on stove oils of something in the order of 4.4 cents a litre. That may be pointing the way up for distillates like heating oils and diesels.

Gasoline pricing is also into interrupt territory and consumers will likely see a movement up by something in the order of 4.6 cents on a litre.

Nova Scotia and New Brunswick users beware and fill before Friday as, I also have upwards movement on gasoline on the consumer level. Because you have a different adjustment time, you won't see as much in the Maritimes but, you will still get hit. So far, I have a 3.4 cent a litre movement to come to you.

Colder weather and OPEC cuts are taking the blame this time around but, you have to ask yourself if the market traders should be under closer scrutiny for this one. Being this close to the end of winter, is it that likely that we are going to go through what's in total inventory?

Perhaps a U.S investigation of trader practises in the U.S is in order?

Oh well...Here we go again!

Auditor General and your road taxes...

"Let's make a deal"

The Auditor General's report on spending told Newfoundland and Labradorians something disturbing that, as consumers of gasoline and diesel products, we should all be disgusted with.

His report stated that...

"In 1996, we concluded that the department was not adequately managing the road system. A decade later, we have come to the same conclusion."

Now, I don't know about you but, this one bugs the hell out of me considering the fact that we haven't seen good road maintenance in spite of the money consumers have invested. Here in Newfoundland and Labrador, we have seen road taxation levels of 16.5 cents a litre on every drop of motive fuel sold here. According to the A. G's report, last year, we saw a paltry $36 million invested when there was an estmate in the 2006 budget of $142.7 million to be collected. The Actual for 2005 was $141.5 million.

There is something wrong with this number...

Last week when the report came out, I took the time to hunt down some of the numbers the A'G use to base his numbers on.

1997's actual amount collected from road taxes totalled $119.4 million to yesterdays report of 142.7. people should be shocked to learn that, we haven't seen strategic investment in the Labrador region of the province where road infrastructure has been a tiresome fight for the citizenry there as well. They deserve their fair share and need it desperately, not a piece of "chip seal" that they'll get on an experimental basis.

What the citizens of this province need is the promise that every cent collected in the form of road taxation goes directly to roads and their related ferry systems in Newfoundland and Labrador...

What the A'G's report gave us was the fact that, since 2002's investment of some $80 million, there's no wonder we're complaining about roads and ferries here in Newfoundland and Labrador, moreso now than ever...

We just don't know when we'll see that strategic investment happen...

Get ready. What you're going to hear in the coming days will be chatter from the governing Tories about the fed's not investing their share...

Ya right...

Deals for roads include a good working relationship with those upalong.

Not likely that's going to happen any time soon...

Gas stays steady, Stove Oils up...

Numbers are showing me that, consumers in Newfoundland and Labrador, will be looking at steady pricing for gasoline...for now and an increase coming on stove oils of 2.4 cents a litre.

Gasoline pricing may not be left unaffected for very long however...

The last week in the trading markets are starting to move pricing upwards again and, all areas of North America will be affected should trading conditions continue. After trading yesterday, gasoline spot pricing rose by 3.1 cents a litre and #2 oils rose by 7 cents a litre over the fix some two weeks ago.

Funny thing is that this is completely contrary to what was heard in the markets some couple of weeks previous. Most market traders were considering the fact that OPEC members continuously cheat on their own quotas and the reports showed that. Warmer weather in the US northeast also aided in good builds to heating oil inventories and a drop in jet fuel demand added to the downwards pressures on distillates.

Not so now...

Reports on the latest round of OPEC cuts are showing that the Saudi's are reigning in their production and the rest of OPEC membership will, most likely follow.

My guess is that refiners in North America are shortly going to bail out on distillate production, considering the lateness of the heating season, in favour of taking a chance on the gasoline market demand for the summer season. It's early to do that considering May month is three months away yet but, that's all the traders have to depend on right now.

Add to that, a predicted drop in overall refiner capacity and the ability" to keep up with ongoing demand pressures that will sap inventories and you have the recipe.That's partly reason why, in the coming weeks, the oil companies are going to be able to put the screws to us all again.

I won't even touch on those predetermined hurricane forecasts that they'll be trading on but, remember where you heard it first.

Look for increasing gasoline pricing again unless the consumer fights back, on a collective basis, by practising conservation measures.

Ya think that we'd learn our lesson on OPEC dependency, wouldn't you?

Not for a long time yet...

What is the purpose of a resource?

Gawd knows I am no favorite of the oil companies, but...

From the CBC archives comes this picture, taken at the Capital Hotel last October, 2006. The picture was taken during a job fair at the hotel.

Some 9000 people showed up looking for prospective employment in Alberta.

While Alberta enjoys having the problem of not enough people to help nurture its resources and help bring them to market, here the problem is the opposite-we have the resources, but not enough of an ability to realize what the purpose of those resources are.

We don't have the courage to sign a deal that means more than just to the provincial treasury.

The picture itself has to ask the question, if you live here in Newfoundland and Labrador, exactly what is the purpose of a resource?

If then, the purpose of a resource is to make things better in your own neck of the woods, then why can't the province get it right? If we can't USE a resource to put our own people to work, then, why do we have them?

The purpose of a resource is to help nurture your own people so they can create an environment where they can stay, have some kind of hope that they can put down roots, to carry out what we have been trying to do for years:

Survive!

If we are so hell-bent on doing what is right for the province, why can't we reach a consensus with those who are to develop those same resources to help us survive in this place?

I don't like the fact that someone can purport to be "doing the right thing" when I see line-ups of people looking for opportunity elsewhere from this land. I don't like the fact that our best resource-OUR PEOPLE- are being exported "raw" to places where they'll be a number and not a name.

It's here that the people of this land want to stay.

To you in the upper echelon I do have to say:

The purpose of a resource, is to keep your most important resource-your people-here.

Exactly how bad is the Hebron-Ben Nevis deal, that we haven't been shown the details of what has been negotiated for before talks broke off? How bad off does the government treasury have to be before the government realizes it has done irreparable damage to it's own people for which their resources have been meant for?

Does the government forget that, with out-migration comes a lack of youth? That in turn means an older population for which they'll be spending millions for homecare when they get older because their own children would have planted roots in a far away land years before?

Does the government understand the implications for which it has broken off negotiations?

Really!...

The words of a Stan Rogers song come to mind here:

"So, bid farewell to the eastern town you never more will see...

There's self respect and a steady check in this refinery.

You will miss the green and the woods and streams and the dust

will fill your nose.

But you'll be free, and just like me, an idiot I suppose..."

Now he's off to Fort McMurray to check on the kids...

I'm sure they're doing just fine.

Maybe they might have phoned you from the 403 or 780 area code already

to tell you so...

More thoughts on U.S energy needs

I was thinking again...

Getting to be a dangerous thing!

Yesterday, i posted a word or two on the story where george bush and the U.S Energy Department meeting with key officials of Natural Resources Canada.

The story, as CBC's Radio-Canada reported, is that the U.S is trying to get Canada to "step up" production of crude or bitumen, from the western oil sands projects, mostly in Alberta. What they are asking the Canadian government for is a fivefold increase in production from the oil sands fields. Not only are environmentalists worried, Canadians should be worried about becoming a US energy supplier before Canadians and their consumers are.

There are other underlying concerns here though, that Eastern Canadian producing provinces should be worried about, imparticularly Newfoundland and Labrador.

What I'm saying about that, is this...

Newfoundland and Labrador fought long and hard to attain offshore oil production, finally seeing first oil from the Hibernia project come to fruition in 1997. The project is now through its half-way point with another ten years of production left in it.

What we have also been left witness to is a break-off over negotiations of the Hebron-Ben Nevis oil project not far from Hibernia and a possible shut-down of the offshore oil industry as Newfoundland and Labradorians now know it.

Talks broke off when the premier of the province wanted "extras" like an equity stake in the project. The oil companies who discovered the resource, with no input of provincial investment in the project, have refused to grant those extra conditions.

Because there is now an impass and there is no hope of a future agreement under the Williams administration, it is very likely that Newfoundland and Labrador will not see the advent of another oil and gas project while the present administration remains in power.

What we possibly are going to lose is a heck of a lot of revenue to look after our seniors who will be left alone because Newfoundlanders and Labradorians will, again, head west to help Alberta produce oil "fivefold" for the United States.

Alberta is presently exporting some one million barrels of oil per day South of the Border and, with the likelihood of five million coming on-stream by 2015, we just might see the population of Newfoundland and Labrador become decimated by the outflux of workers and their families to western areas.

There's trouble ahead...

The question remains however, "what is the province's best resource that it should preserve for future generations?"...

The answer in this case, should be " To preserve it's most cherished resource-it's people-for itself."

If the western oil sands developments take place, then the world's next endangered species might very well be Newfoundland and Labradorians...

It's going to be a slow death...

Hell no...

Canada beware!...George is coming!

According to CBC's Canad Now, George Bush's call for alternate supplies of crude oil other than what comes from the middle east, is going to be answered by Big Oil in Canada.

When George spoke to Congress last year, he told America and the politico's gathered there that America had to break its dependance on Middle East oil. According to the story, there was a "meeting of the minds" represented in part by Big Oil. The plan was a rapid, five-fold expansion of the oil production capability of Western Canada's tarsands.

Now, correct me if I'm wrong, but isn't oil covered under the North American Free Trade Agreement, or NAFTA for short?

If that is the case, Canada's resources of oil could be swallowed up by the mere fact that NAFTA calls for any exports from one country aren't allowed to be reduced. In other words, we have to maintain and increase production to meet American industry and consumer needs.

Think of that for a minute...

While Canada produces 2.7 million barrels a day, it ships some. Uncle Sam will be looking for an added 1.5 million barrels a day by the year 2015 and that doesn't include present or future demand under "normal circumstances". Add the rising number of drivers and industries and we have a recipe to drain our own resources before the United States explores some other areas it hasn't touched yet...

We just might have to "bend over backwards" for Sam rather than ourselves in a few years.

I don't think so George, b'y!

Wait for it...

Some oil company officials and NYMEX traders must be basting in their own juices right now. Over the last couple of weeks, we've been witness to oil dropping from record highs a short time ago, to todays $51 and change.

Poor oil companies!

Pooor OPEC!

Remember when the OPEC'ers used to ramble in the news about maintaining oil between $22 and $28 US a barrel?

I can't seem to find the record, or news report, that saw OPEC officially change their minds on the range they were comfortable with. It's too bad they're too comfortable with this one.

Any day now, before February sets in, you will be witness to a breaking business news story that OPEC will be holding an emergency meeting to discuss production cuts in addition to those already self-imposed.

What you'll be witness to is direct manipulation of the family budget-or is it-victim of?

Here is what we really have, and some might call me nuts...

Here is reason enough why Canada should have a policy of "us first" when it comes to Canada's production of crude resources. If a company is to produce Canadian resources and supply the consumer of this country, it should be Canadian law that Canadian consumer and business needs are met first before any exports take place, and refined before they are, at that!

Here is reason enough why Canada should have a green program to break our dependence on foreign, let alone domestic- sources of petroleum products.

Here is reason enough why the world should be straight-out saying "no" to OPEC...

If we had the sense, we'd all call a world boycott of OPEC petroleum products and start using our own.

Told you I was nuts!