Prices down...

Look for gasoline to drop by Thursday

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

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

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

As to how much things could slow?...

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

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

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

Regards,

George

Gasoline to drop?

Numbers show a good drop coming...

Greetings from Corner Brook!

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

Just a shortie this time around....

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

Gasoline is a different story, however...

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

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

Regards,

George

Ike crisis passes
Gasoline and heating fuels to drop tonight

Media release

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

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

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

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

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

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

For more information, contact;

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

Ike update: Most damage to refineries "superficial"

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

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

Regards,

George

Ike Update

Hi to all...

Some good news in all the Ike mess...

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

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

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

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

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

Hope this helps!

Regards,

George

Highway robbery

Well...

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

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

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

Doubtful, and here's why...

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

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

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

What gives Big Oil?

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

Thoughts?...

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

Number I have here is 10.2 cents plus...

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

Regards,

George

Enter Ike...Stage center

...and here we go again...

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

Yes...I said 13 cents a litre.

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

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

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

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

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

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

Regards,

George

Does anyone understand the Green Shift yet?

Really...

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

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

My house and the Green Shift"

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

The results?

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

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

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

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

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

Ahem...

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

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

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

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

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

Let's take Churchill Falls...

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

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

Numbers this week

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

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

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

Summary

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

Hope all this helps!

regards,

George

Here comes Gustav!

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

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

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

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

The reason?...

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

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

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

Why do I say 30 cents?

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

So, consumer be warned here!

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

Let's see if they go for a repeat.

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

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

Regards,

George

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

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

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

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

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

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

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

Media release

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

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

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

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

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

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

-30-

For more information, contact;

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

No change to pricing this week

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

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

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

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

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

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

Watch it.

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

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

Regards,

George

On the tail end of last week...
Consumer pricing to drop again

Media release

Conception Bay South, NL, July 29, 2008- Consumers in Newfoundland and Labrador will again see some drops in most petroleum pricing, all this coming on the tail-end of market activity last week.

What consumers will see
“With five days of seven days data needed, consumers will see close to 2.8 cents a litre down on gasoline while heating and stove oils will drop by close to 4.1 cents a litre. The heating-stove oil number may also be an indicator of where diesel pricing may be going as well which will be welcome to the transportation and fishing industries in the province. They’ve been waiting for a long time to see pricing come down.

Cold comfort in the heating-stove oil numbers
“Heating and stove oil numbers have come down in recent days but there is still a long way to come down just to reach year-ago levels. Heating oils will still be 37 cents a litre higher than the same time last year and that’s with this weeks projected drop in pricing included. If we don’t see a concerted drop in oil and related refined commodity pricing, then there is big trouble ahead this winter for consumers. It may be hot outside now but the numbers are providing cold comfort for consumers when looking at last years numbers. There’s still nothing here for consumers to be happy about in spite of recent drops in pricing.

What will oil do in the next little while
“OPEC production is picking up in spite of a drop in demand in recent weeks and that figures heavily this week as we see the numbers change in the consumers favour again. OPEC member Saudi Arabia was responsible for some increase in available crude oil on the markets as the OPEC country promised an added 300,000 barrel increase in June and added another 200,000 starting this July. That second oil increase will make its play in the markets shortly and we’ll see a small move back to the US dollar as an investment rather than commodities-at least for the time being. That may mean some slight relief to come for consumers as both demand and inflation weigh in on overall consumption and the high price of oil plays as a mitigating factor in consumer purchases.

Other factors remain in play
“Consumers still have to be on guard for other conditions that remain in play in the markets. We still have the promise of world geo-political situations like Nigeria and the Middle East and Iran that can show their ugly head at any time as Nigeria did in yesterdays market play. We still have Hurricane Syndrome playing in the markets as well with the markets playing with weather conditions and possible supply and refining disruptions in the Gulf of Mexico. Traders will use anything right now, to help support oil pricing rather than see a decrease caused by market actualities in the future.”

-30-

For more information, contact;

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

First notice...

Numbers pointing down again

Funny title for an article I know...

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

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

Let's keep the fingers crossed...

Regards,

George

Interruption possible for all fuels
Recent market activity warrants the use of interrupter formula

Media release

Conception Bay South, NL, July 22, 2008 – Consumers in Newfoundland and Labrador can expect to see the use of the Petroleum Pricing Office’s interruption formula this week as all numbers are showing that gasoline and heating-stove oils have met the criteria required.

“Consumers can expect to see the use of the formula for gasoline as well as for heating and stove oils. I also expect that diesel will also fall under the criteria based simply on the most recent market activities. When oil pricing loses as much as it did last week, then you also expect for the related refined commodity to do the same,” said George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

“With five of seven days data at hand, I have gasoline to drop by 9.9 cents a litre and heating-stove oils to drop by 7.7 cents a litre. Initial numbers showed a 9 and 6 scenario was the more likely based on the first two days data. The heating oil number may be a good indicator of where diesel may be going as well. We now have five days and that’s why the numbers have changed. I expect there to be little change when the other two days data become available.

“Markets for oil traded down based on the troubles the markets are seeing with the world economy right now. We’re facing economic slowdown, a drop in consumer demand overall and that has led to some tidy gains in oil and commodity inventories. The previous fears of an economic blockade against Iran and it’s pursuit of a nuclear program abated somewhat and the possible supply disruption scenario from that area was gone from the traders basis for the elevated price. Hence, the consumer will see some relief in pricing this week.

“We know that high pricing has become an undue hardship for a lot of people and we’ve written a note to the Public Utilities Board asking them to pass these substantial savings on to the consumer in this province ahead of the ‘scheduled’ interruption price change to consumers. We want these savings passed to consumers for Tuesday midnight instead of the Thursday implementation just to bring emergency relief to consumers out there. Based on the performance of the dropping price in other markets, I think we should like to see something happen here sooner rather than later.

“Right now, some markets have seen corresponding drops in numbers where there is still competition in the areas involved. Some areas of Toronto have seen pricing drop by as much as what I have on paper for this area now. We need to see some redress to consumers and being as extraordinary situation as we’ve seen in the markets since last Tuesday; I feel that the consumer in Newfoundland and Labrador deserves to see the break early.”

-30-

For more information, contact;

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

By the way, be sure and leave any comments you might have. They all help... whether constructive...or not...lol

What goes up...

Must come down...

I know...

This increase surprised me a little too...

I just didn't know anything about retailers looking for the added 1.25 cents on their margins, not that they didn't deserve it now mind you. What makes me sick about it is that the 'majors' will get it too, as far as I know.

All in all, my numbers in the end allowed for an added 7/10ths of a cent a litre (with my margin of error of 3/10ths of a cent) on gasoline and I also had 2.9 down on heating and stove oils. It was that extra 1.25 added that put the screws to my numbers this time.

Here's what I wanted to let you all in on though...

I've been getting a lot of emails on why our prices haven't come down the same as other jurisdictions and I do have an answer for everyone on that...

Hold off as much as you can until next Thursday, the 24th...

Here's why...

Our regulatory system uses what I like to call a "passive" system of regulation; that is, it waits for events to happen in the markets for a two week period and then reacts to what has occurred during that two weeks of business. Prices that were set this morning were set based on the timeframe of July 2nd and July 15th, from a Wednesday to a Tuesday.

Tuesday was when we saw oil first take it's precipitous dip down, if you remember...

The problem here was exactly that; that prices didn't dip for oil until that last day of the regulatory period. Call it bad luck, but other markets including the immediate Toronto markets, saw prices for gasoline hit $1.40 for the same timeframe which is not unusual for what we saw in crude oil prices.

Our prices never moved during the same time...

Here's where we might see something happen the other way however...

The fall in crude oil prices continues, so much so, that my numbres are already showing the likelihood of a interruption scenario taking shape, only this time DOWN in price. With only the first day of the regulatory period on record, already I'm showing dowjn on gasoline by near eight cents a litre and heating/stove oils down by nearly the same.

I'll be cautious on this one though...

Anything can happen in the markets that might see a complete and utter reversal of what Tuesday saw in the markets and the whole interrupt scenario might be thrown to the wind. I'm holding back on my purchases in the meantime in the hopes that we might see something in the offing next week.

You might want to do the same...

Reagrds,

George Murphy

Gasoline prices to remain steady-Heating and stove oils to drop

Media release

Conception Bay South, NL, July 15, 2008- Consumers of gasoline in Newfoundland and Labrador shouldn’t see much change in gasoline prices this week when the Petroleum Pricing Office sets prices again, that’s according to George Murphy of the Consumer Group for Fair Gas Prices.

What the numbers say
“From the looks of things, gasoline prices may show no change according to the first twelve days of data and today’s market activities. Right now, those numbers are showing almost a ‘break even’ scenario. The numbers are slightly different on the heating oil front. Numbers there are showing an almost 1.5 cent a litre decline and that doesn’t include the market sell-off of distillates we’re witnessing right now. Heating and stove oils may drop more than what we have on paper right now,” said Murphy.

“I would expect the heating oil numbers to be the same for stove oils and that should also reflect a very modest decline in diesel prices. How long will the slight retreat in pricing last would be anyone’s guess at this juncture. We already see a possible winter record for heating and stove oil pricing barring any economic collapse and drop in distillate demand. Today the markets are reflecting the stark reality that we’ve seen all along; that consumers are hurting because of high petroleum pricing. Now that various economies failed to react to the rising costs of oil, we’re seeing deeper economic impact and the likelihood of recession. Because of that, there’s a drop in pricing today because of the fears of a drop in petroleum demand. What traders have sown, the economy can reap.

Not out of the woods yet
“Waiting in the wings are other possible factors that could increase pricing again. We are, of course, into Hurricane Syndrome season and that means possible plays in the markets that reflect possible supply disruptions or disruptions to imports. We remember well Katrina and Rita in September ’05. Venezuela also is promising to cut off supply of crude oil to the United States if Exxon Mobil is successful in freezing the assets of the national-owned Petroleos de Venezuela’s overseas assets. Other geo-political factors remain in play such as the ongoing disruptions in Nigeria, OPEC talk of possible production cuts in the face of a drop in world demand and, of course, consumer demand factors.

Last independent retailer to be sold?
There is some concern over the rumored sale of Tibb’s Oil in the immediate St. John’s heating oil market. I have received a couple of calls this week expressing the consumers concern over the possible sale of the area’s last independent retailer and the effect on the heating oil market if there are no independents left. This should be a concern to most after the recent sale of Forward’s Oil to Harvey’s Oil this past April. If wee see the sale of Tibb’s Oil to some other company, we will have seen the removal of the last independent heating oil retailers from the St. John’s market and that means some possible trouble to consumers of the product. I believe that there will be an adverse affect on the retail heating market in the area and that may lead to one company having a more than obvious dominant market position let alone the removal of competition in the market.
I think that, if the rumors were found to be true, then the Competition Bureau should be made to look at the situation and prevent the sale of the company to just that one retailer. It’s here that we need to stand on guard to protect consumers from any dominant market scenario. The problem here is that high heating oil prices themselves have become a factor in the independents demise. A lower sales volume because of an increasing price may well have been a factor in the sale, if it is true. I’m still trying to dig into this one.”

-30-

For more information, contact;

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

Economic warfare 101

Oil is a funny thing...

Give it to one country when there is a high demand and you have the world's attention...

Such is the case of Iran today where oil again, is trading up on the news that Iran will "pull the trigger" if Israel attacks Iran's main nuclear facilities. As a result, there's also a promise of supply disruptions from the Middle east country that amounts to some 4.4 million barrels a day so, if the Israelis do attack the facilities at Natanz like they did at Osiraq in Iraq in 1981, we have a problem. Overall production will not be met by OPEC to cover the needs of an oil-thirsty world and prices will skyrocket because demand will not be met. Spare capacity cannot be met by the group.

A BIG problem...

It's like this. If Iran does disrupt production then we can thirst for heating oil a few dollars more. Gasoline prices will most likely reach unheard of levels.

The likelihood of an attack by the Israelis is good as they've done it before and with perfect execution. Without loss to themselves, Israel launched a daring raid against Iraq's nuclear research facilities by flying below radar over Jordan, the Iraq countryside and below radar defenses. The attacks that knocked out Iraqi facilities was over in less than a half hour and the Israeli air force flew back unscathed to home soil.

If yesterdays missile tests are any indication, expect to hear of a raid carried out by Israeli forces almost any day now. Israel will not sit lightly and wait for Iran to strike first. They've never been one to turn the cheek since Munich .

To tell you the truth, I couldn't blame them one bit.

I just can't stop thinking how much the Iranian government might be making on oil just because it is rattling sabres again, photo-shopped pictures and all.

Economic warfare.

Coming soon to a gas pump near you.

Keep the oil tank filled if you can...

Regards,

George

Heating and stove oils…

Interruption possible this week to heating and stove oil prices

Media release

Conception Bay South, NL, July 8, 2008- Consumers of heating and stove oils, and possibly diesel fuel, may see an increase in price this week that could be as much as 6.66 cents a litre. That would bring the maximum retail price in excess of $1.29 a litre for the St. John’s and immediate area.

“The numbers I have as measured for the first five days of this regulation period range in excess of six cents a litre. It remains to be seen if during Monday and Tuesday trading those prices backed down as much as oil did in order to avoid interruption. If they never, consumers could be looking at a new all-time record price for heating and stove oils, all at a time that puts the important heating product on life support”, said George Murphy, group researcher for the Consumer Group for Fair Gas Prices. “If they did, then we’re still looking at a possible increase to consumers coming next week. Gasoline will not face interruption to pricing this week. I guess you can say that ‘Pump Day’ is officially cancelled until next week”

“What should bother people is the fact that we’re now experiencing hot weather and that’s the time when traditionally, heating and stove oils have been known to crash but the alarming aspect here is that prices are moving in the opposite direction. Numbers here I worked up are showing that $1.40a litre heating and stove oil is a distinct possibility this winter unless we see a mass retreat in prices. Sad to say but there has to be evidence of heavy economic damage or large inventory builds in distillates before we see any retreat in heating and stove oil pricing.

“Diesel pricing may also be reflected in those numbers although I don’t expect to see as large an increase. Diesel may dodge the interruption process but, if it doesn’t, we’ll be looking at a larger burden being placed on our transportation and fishing industries. They need some sever help but, no one is listening. It might be 25 degrees outside today but there’s more than 25 degrees of separation between what the markets are doing and the actualities that we hear that the markets should be reacting on.

“What the investor doesn’t realize is the fact that, not only are small independent oil dealers being sucked dry by the loss of volume, but they are also destroying the need for heating and stove oils as primary heat sources. They’re forcing people to go to other sources of heat other than petroleum products. They are, in fact, setting themselves up to get burned and, at the same time, radically changing the home heating markets in such a short time..

“Last week it was a drawdown in crude inventory, as miniscule as it was, the ongoing world geo-political situation in Nigeria and more importantly, the Iran situation and their pursuit of a nuclear program and Israel’s promise of an attack against those facilities. Also mixed into the equation is the falling US dollar and investors continuing to hedge against commodities rather than the US greenback. What about the fundamentals like dropping demand?”

-30-

For more information, contact;

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

Don't look now, but...

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

What does that mean?

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

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

Blame this one on the speculators again...

Regards,

George

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

Media release

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

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

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

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

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

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

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

-30-

For more information, contact;

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