Could it be? Gas under a buck a litre?

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

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

Stay tuned...More on Tuesday night.

George

Numbers show no interruption this week...

Hmmm...

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

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

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

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

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

Oh my...

Regards,

George

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

Media release

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

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

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

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For more information, contact;

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

Another drop in prices coming, but...

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

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

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

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

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

Why am I crossing my fingers?...

Regards,

George

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

Media release

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

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

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

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

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

To keep you up to speed...

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

Hold off on everything.

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

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

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

Stay tuned...

George

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

Media release

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

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

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

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

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

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

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

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For more information, contact;

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

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

Media release

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

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

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

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

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

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


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


For more information, contact;


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

Changes coming to the update...

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

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

Fisherpersons and truckers take note...

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

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

Look for those pricing changes in the next update.

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

Stay tuned!

Regards,

George

Going...going...

Gone...

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

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

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

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

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

Oh well...

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

Regards,

George

Prices down...

Look for gasoline to drop by Thursday

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

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

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

As to how much things could slow?...

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

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

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

Regards,

George

Gasoline to drop?

Numbers show a good drop coming...

Greetings from Corner Brook!

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

Just a shortie this time around....

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

Gasoline is a different story, however...

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

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

Regards,

George

Ike crisis passes
Gasoline and heating fuels to drop tonight

Media release

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

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

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

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

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

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

For more information, contact;

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

Ike update: Most damage to refineries "superficial"

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

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

Regards,

George

Ike Update

Hi to all...

Some good news in all the Ike mess...

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

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

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

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

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

Hope this helps!

Regards,

George

Highway robbery

Well...

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

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

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

Doubtful, and here's why...

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

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

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

What gives Big Oil?

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

Thoughts?...

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

Number I have here is 10.2 cents plus...

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

Regards,

George

Enter Ike...Stage center

...and here we go again...

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

Yes...I said 13 cents a litre.

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

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

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

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

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

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

Regards,

George

Does anyone understand the Green Shift yet?

Really...

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

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

My house and the Green Shift"

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

The results?

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

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

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

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

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

Ahem...

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

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

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

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

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

Let's take Churchill Falls...

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

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

Numbers this week

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

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

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

Summary

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

Hope all this helps!

regards,

George

Here comes Gustav!

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

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

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

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

The reason?...

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

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

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

Why do I say 30 cents?

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

So, consumer be warned here!

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

Let's see if they go for a repeat.

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

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

Regards,

George

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

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

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

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

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

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

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

Media release

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

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

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

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

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

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

-30-

For more information, contact;

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