Numbers up, but for how long?
Markets could be on the verge of another collapse

Media release

Conception Bay South, NL, April 27, 2010- Consumers in Newfoundland and Labrador will see some slight upwards movement in prices this week when the Public Utilities Board adjusts prices this coming Thursday. That’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Numbers are up slightly this week, all due to the three dollar a barrel increase in crude prices, that is, up until yesterday’s sudden drop. Numbers show that heating and stove oils could increase by 6/10ths of a cent, gasoline should increase by 1.8 cents a litre and diesel, also up by 7/10ths of a cent a litre,” Murphy said.

Europe faces tough financial crisis
“If there is good news in the markets against prices increasing further, you need not look further than the ongoing fiscal situation developing in Europe with Greece’s fiscal problems. Portugal and Spain are also dealing with a high debt-load and are both being forced to take some tough austerity measures to help support their end of the Euro. In the meantime, both Greece (BB+ from a BBB+ rating) and Portugal (A- from A+ rating) have both had their country’s credit ratings reduced and that led to a drop in the Euro against the US dollar. The Canadian dollar also lost ground against the US greenback. Equities also took a pounding yesterday and that spells trouble as the European Union tries to manage its members debt-loads.

“These tough financial times in Europe and Portugal have presented the people there with the possibility of hard times to come and the markets see that as a future sign of dropping demand for petroleum products as consumers cut back. Those problems, along with rising interest rates and increasing worldwide crude oil inventories, spell further trouble for crude oil in the weeks to come. The austerity measures these countries will have to take will, no doubt, be harsh on consumers there.”

Tidbits
• According to an industry petroleum report, inventories of crude oil probably increased by as much as 5.3 million barrels, extending increases for the last few weeks. The US Energy Information Administration releases its report Wednesday. If that also shows an increase, look for the slide to continue.


Iran using more tankers for storage (Bloomberg)
• “In a further sign of crude oil troubles, Iran added three more super-tankers to the fleet now being used for storage purposes. The number of tankers now being used now matches the same number they used when crude oil prices collapsed in 2008. Iran now has sixteen tankers used for storage out of a fleet of twenty eight, each being rented for that purpose at a cost of close to $47,000.00 US per day.”

IEA says $85 US oil will damage recovery efforts. (Edmonton Journal)
• “It’s something I have always said all along, that high prices for oil will hurt the consumer and hinder any economic recovery, but now we’re hearing it from the International Energy Agency. Now, the IEA says that anything upwards of $70 US to $85 US will hinder, if not harm, any ongoing economic recovery efforts. While the royalty numbers might look good on the provinces treasury, consumers are beginning to hurt. High prices for oil also bring with it the specter of the possibility of surcharges again and we're also dealing with artificially high inflation to prices caused by increased transportation costs.”

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For more information, contact;

George Murphy
Group researcher/Member
gasprices@hotmail.com