Complete collapse of oil prices coming?

Boon to consumers in Newfoundland and Labrador though...

If Merryl Lynch and Platt's are right, then the provincial treasury of Newfoundland and Labrador may not score the large surplus for this year that was expected for this fiscal year.

That's not the best of it...

According to figures from the EIA out of the US, we may have already reached the point where the provincial treasury may be grossly affected by the drop in crude prices. While there may still be a slight chance of balancing the expectations for this year, if the markets hold true, that we will be in recession for close on two years, then the royalties paid back to the province will almost be a pin-drop compared to this year. Twenty two gravity oil is trading at $37.76 a barrel while I have the break even at $36.63 for the budget to be affected. 34 Gravity oil unlike that of Hibernia, is now trading at close to $45 bucks a barrel. The finance department must be on the edge...

Wait for next year...

If the stories are true, it would underscore the estimate I had in July of possible $60 per barrel oil that I expected would happen if a recession hit, a recession that would be caused by excessive and artificially inflated energy pricing. What a kick in the teeth!

We're almost there...

Merryl Lynch is now reporting possible oil pricing of $25.00 US a barrel for West Texas Intermediate type crudes which, if the pattern follows, makes Brent type crudes, of which Newfoundland and Labrador crudes are priced, around $4 bucks less than that. A pittance in royalties could be on the way for the Newfoundland and Labrador treasury but, it could prove a boon to the consumer of gasoline and heating oils.

How low can consumer pricing go in Newfoundland and Labrador if that scenario were to happen?

How does 74 cents a litre grab you for gasoline and 41.5 cents a litre for heating/stove oils sound? (Depending on the retailer you buy off, mind you)...

One can only wish that prices go so low that we don't have to see the malls blocked with people trying to keep warm this year and one can only wish that we'd have no need for a heating rebate program as well.

Those last two realities may be closer than we think, that's if OPEC stays out of the mess in the markets, like the Russians are...

Keep the fingers crossed!

NOTE: In the meantime, I am also tracking some nice drops in all three groups of fuels I Measure. There is a possibility here that we could see interruption for gasoline, heating/stove oils and diesels for next week, so keep an eye out here Tuesday evening for any word on that.

Regards,

George