Attention Newfoundland and Labrador!

All areas to see a drop in prices

When prices are adjusted next week to pricing for Newfoundland and Labrador consumers, we should catch a break at the pumps.

So far, as of yesterdays market close, we're looking at 2.8 cents a litre. If the trend continues, it should be something more than that.

Nova Scotia and New Brunswick consumers should get to see the benefits of the drop this coming Friday.

Take notice and spread the word to hold off on consumption, or, at least buy in some moderation until these drops hit. Looks like the consumer out there may have hit the brick wall on pricing.

I'll have more on this to come.

“Drop gasoline taxes to aid tourism industry,” says consumer group

News release

Paradise, NL, May 28, 2007 – The provincial government should drop a portion of gasoline taxes in the province as an incentive to improve the tourism industry. A cut in the tax would be beneficial to Newfoundland and Labrador residents and those from out of province who see high gasoline pricing as a potential barrier to making the province a vacation destination this year.

“We know that gasoline pricing is high and is expected to stay that way for the rest of the summer but, besides governments’ strategic investments in advertising, it needs to give a financial incentive to consumers who they hope to draw to rural areas to spend some vacation money. Government has to be seen to be doing something for us as vacationers and for those who could potentially want to visit us,” said George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

“Last year, we made the call to drop some of the taxes on gasoline. Government said at the time, that they couldn’t. Their reasoning was that high pricing led to a drop in consumption and that meant less taxes collected. Contrary to what government said at the time, that’s not how it worked out. Last year, government collected $145 million, well up from the $142.5 collected in the year previous. This year, they are projecting nearly $147 million to be raised through gasoline taxes. Past numbers alone prove that people still had to buy gasoline, although the price was still high. They just didn’t go out of their way to visit as in other years.

“The increase in tourism numbers for the St. John’s area showed that there was more airline traffic into the city. Tourism numbers were up slightly in the St. John’s and surrounding area last year, but rural areas suffered a different fate. Rural areas didn’t have that same advantage and we need to give them a fighting chance at getting tourism revenue up. We also need to give the Newfoundland and Labradorian tourist the incentive to stay at home; give them a chance to explore our own province.

“Numbers were down from years previous by a few percentage points. Last year, we saw a sharp upwards increase in pricing that peaked during the first week of July. This year, they’ve hit last year’s numbers already. Pricing is expected to stay higher and for a longer time this summer. That could mean trouble for everyone and we’ll need to depend more on our own people to support our rural tourism markets.

“I think that consumers here already recognize the need for road and bridge work. We also have heard that government is intent on spending a “record” $66 million on roads and related infrastructure, a far cry from the money they have collected in the past from gasoline and other motive taxes. We’re not asking for much besides recognition from government that we have problem with high pricing. A cut of some four cents on a litre in gasoline taxes for the summer is not an unreasonable amount to ask for. What it symbolizes is that recognition, that as tourists and consumers, we are made to feel that we’re welcome at home too.”


-30-


For more information, contact;

George Murphy
Group researcher/ Member
Consumer Group for Fair Gas Prices
(709)782-8053
(709)685-6186 cellular
My blog: www.gasandoil.blogspot.com
Email: gasprices@hotmail.com, gasprices@nl.rogers.com

It's all about the refinery problem, but should it be?

You're hearing an awful lot about refinery problems and the ability of refineries to shove more expensive crude through the refinery system.

You're also hearing that demand and supply are in delicate balance and that inventories of gasoline remain low.

What you hear is all about what the markets want you to know and not about what they should be telling you. They've compromised the economy by taking a product like gasoline and increasing it incrementally to the point that it rises far ahead of the world inflation rate. It must be the only product in the world that can do that.

But, here we are at record prices, and Newfoundland and Labrador consumers will take another 3.6 cents a litre hit on Thursday morning, May 24th.

Hit the pumps again!

Hurts too...

What makes this one specially hard is the fact that the new price you'll see will be an all-time record outside of the couple of days in the aftermath of Hurricane Katrina. Last year saw a record $1.22.5 a litre. Thursday should show $1.23.4 or close to it.

What also hurts is the fact that heating and stove oils are set to increase, albeit just a couple of tenths up. Reality tells me that tis the season for pricing to head the other way for a winter commodity. It just ain't happenin'!...

What kills me about all this is that Big Oil has been long quoting the Nigeria situation explaining the need for the best crude oil the world. What they haven't explained is the fact that oil is so expensive when there is plenty of the cheaper type crudes out there. Not everything that is available out there has to be a West Texas Intermediate, although it would be nice. The reality of the markets are telling consumers that we can get by without the expensive stuff and so should you.

Remember, Big Oil...You're making record dollars in refining. We shouldn't have to be made to follow the piper on this one. You created the refinery breakdown problem when you didn't invest big money into refinery maintenance. You must have known this would be a problem in the future.

Or, was it the need for better returns for your shareholders that caused all this? The scenario: well, if we don't invest in our refineries, we get to save money. When they break down, we get to reap the benefits of a fuel shortage!

Funny...

For some reason, I just don't think that Big Oil had the consumer need at heart when they let that card slip from up the sleve.

Question is: what else have they got?

Regards,

George

All pricing up...
Markets just don't reflect the reality

Watching the markets today?

Oil?

Yup. You know what's coming!...

If you happen to be close on empty right now, may I suggest a fill-up, because you know what you are going to see in the morning.

In the United States, you will be looking at another couple of pennies on a gallon while, here in Canada, you will see close to another two cents on a litre. Make note of the date on the blog here because when you come back again, conditions may have changed.

In Newfoundland and Labrador, while prices here won't be changed again until next Thursday, there is a guarentee that we'll be looking at close to another 4 cents on a litre at the pumps if all conditions stay the same.

Well, why?...

Today the markets are trading on speculation that there are going to be refinery issues this summer. That's not unlike when Hurricane Katrina blew in over the Gulf Coast in 2005. Back then, there was a promise of refinery disruptions that eventually came true. While nothing like that has happened yet, the markets are trading on future, perceived problems that HAVE YET TO OCCUR.

That's what's wrong with the gas pricing picture. We're paying for something now, rather than on what can actually happen.

That's like betting on the Toronto Maple Leafs winning Lord Stanley's mug; hardly likely this year but entirely likely in the next twenty years.

Yes, the Leafs will win the cup but it hasn't happened yet...

Traders are betting on your future. Let's hope they lose their shirts, but, right now, someone on the New York Mercantile Exchange is making a heck of a lot of commission and Big Oil loves them for it.

Conspiracy? Dunno about that, but certainly a symbiotic relationship!

Regards,

George

The promise of increases to come...

Nigeria disruptions to supply, inventory losses, refinery problems...

We hear every day now, that pricing will rise further to consumers and that there is no relief in sight. What we do know is that refiners have been making a fortune and so have their Big Oil cousins. All said, the promise is there for pricing to hit record levels, especially after todays news.

The situation in Nigeria is a restless one. When oil was discovered there some years back, it brought with it the promise of a better life for those who didn't know the wealth to be gleaned from the underground resource. All that was heard was that "things wuld get a whole lot better".

They haven't...

Especially in the resource rich Niger delta where most of the resource is located.

The people there live in squalor and they have yet to see any tangible benefits like money for education, roads and infrastructure.

Where is Big Oil in this?

Does Big Oil have a responsibility to look after a people when it goes for their resources, especially when a government like that of Nigeria fails them? Should Big Oil continue to rape a resource knowing that the harvest of which can bring the problems that have come to be realised?

What of the next country?

Next time you go to the pumps, consider this:

If I have to pay high prices for a product that is succeptible to the pressures of a geo-political situation in Africa, should I have to see pump pricing that DEPENDS on a resource from that region? Should I be worried that someone is smacking a hole in a pipeline to get part of a product that I can take for granted at the pumps of Young Street in Toronto or Kenmount Road in St. John's?

Should geo-political problems elsewhere be the determining factor in the resons why Canada should have its own sources of supply rather than be dependent on someone else's resource, namely Nigeria's?

Toady, Shell announced that it has lost another 170k barrels a day in crude oil production from that country and so far, the markets are pointing up on the news. The promise is there at this time, to see another couple of cents on the pump price by tomorrow morning, all for the simple sake that the citizens of the Niger Delta are looking for their piece of the oil-rich pie: for fairness and fair treatment.

Perhaps it is time we look at ourselves and a secure supply for Canada, not just for our sake but for the sake of a people who are thrown to the wayside in the vain hope that Big Oil is looking merely at profits instead of ensuring the people of the country get their fair share rather than letting despots who rule the roost gather the benefits derived.

Perhaps Big Oil should take part responsibility in getting the people of that country looked after before they smack a drill-bit in the ground. Maybe they shouldn't pay directly to governments who aren't going to look after the people for them. Ahhhhh, but that's the way governance works in the world, isn't it?

Perhaps it should be the case where Big Oil should just back away until people's rights are recognised.


Regards,

George

Gasoline to rise. Our turn to take the hit...

In Newfoundland and Labrador, consumers will wake up to find that pricing for gasoline did, indeed rise a couple of more pennies, to reach an unprecedented level for this time of the year.

Spot pricing for stove oils however, are showing a downwards trend thankfully...

So far, gasoline shows a 2.7 cents a litre increase while stove oils show 1.24 down. That's with two more business days to go.

I expect that both numbers will be less than what I have here with the next two days measurements included. I expect gasoline to show a more moderate increase than what I have and for stove oils to decrease still further.

Keep your ears to the media to hear the details. I'll have a release out in the morning when numbers for "day 13" come into play.

Now, for what's on my mind after all these increases in other jurisdictions the last couple of days...

When I first heard of the latest rounds of "panic buying" I kept wondering how these companies or businesses manage to stay in business without some sort of consumer revolt. I am absolutely amazed that some of these businesses could charge what they did-when they did without any hard evidence to justify such an increase in pricing to the consumer.

Vancouver did not deserve to see pricing that hit $1.32 a litre at the pumps. Nor did Toronto residents who saw an added 10 cents a litre.

Spot pricing for gasoline product peaked at 7 cents from April 22nd to reach 67.1 cents a litre on April 30th...

Just because we're dealing with a "savvy" oil industry that knows they can "do maintenance" to justify a draw on United States gasoline inventory does not justify the move in pricing that consumers saw. Shutdowns for refinery maintenance is taking longer to achieve the last couple of years and the periods that they claim for taking refineries off-line to do it, are getting longer.

Why?

My belief is that refiners want to draw on inventory to drive up pricing simply to recoup the capital costs for such "maintenance". The more time they take in getting refineries up, the less inventory is made available for the summer driving season. The less inventory gives the trader more time to speculate on future pricing of gasoline and other motive fuels and that means higher pricing to be paid for a product that is so important to the consumer.

We're lucky -this time- that our market here in Newfoundland and Labrador, is regulated. What regulation did at this time-frame the last week was take away the initiative for the companies to drive up pricing here. It also protected the consumer from an "artificially created" and imaginary problem that was created by the New York Mercantile Exchange traders. We were, at least partially protected from the hit consumers had to take on the mainland.

Should there be an investigation into the oil company's practises in North America?

Yup!...

Darn tootin'!...

Regards,

George

What's got to break?

what will it take to draw down pricing?

I get a lot of people asking me these questions lately...

Maybe it's time I give everyone some answers on what has to change though, and not what will it take...

I've come to learn these things over time. some things here might be hard to understand. If you find it hard, drop me a note and I'll try to explain it later. Sometimes I have the tendency to "over-explain" things and that drives people, even my wife, nuts!

The problem you have on the markets is relatively simple though. What you have is the case where Big Oil closed refineries, we still kept driving as we always did and then some.

In short? While the oil companies "cut back", we didn't... and we also put more drivers on the road at the same time. Inventories are being impacted and, depending on the season, it could either be gasoline or heating oils and distillates that are affected.

We helped create the problem by not asking our car manufacturers to give us better gas mileage. We've created the problem by becoming dependent upon "exterior" sources of supply. We have allowed our own Canadian supply of raw product out of the country to be refined south of the border.

We are the authors of our own demise...

Today, as you are watching your pricing rise, remember the basics that have been created for all to see. Limiting supply to an increasing number of consumers equals trouble. Not asking our governments for better than what we've gotten over the last few years should also have us thinking a little bit into the future on anything that's sucking the bucks out of your pockets.

That's it from me for now,

George

"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.