As predicted…

Numbers down this week.

Media release

Conception Bay South, NL, June 5, 2012- Consumers in Newfoundland and Labrador will see the benefits of a drop in oil prices this week when the Public Utilities Board adjusts prices this week, but it’s not as much as it should have been. That news from George Murphy, group researcher with the Consumer Group for Fair Gas Prices.

Dollar down

“Consumers will see a drop in prices this week, but the falling Canadian dollar actually cost consumers this week,” Murphy said. “Consumers could have been looking at an additional three cents a litre off each product price if the Canadian dollar had to remain untouched by the loss in oil prices this last week. Being a resource dollar with almost no supporting industry behind it, cost Canadians and Newfoundland and Labrador consumers. The dollar has lost almost five cents against the US greenback in the last month.”

The numbers

‘Consumers will see a drop of 3.91 cents a litre for heating and stove oils. Diesel shows a drop of 4.2 cents, while gasoline shows a downward move by 3.1 cents a litre. While a downwards move is positive, I’m disappointed that it could have been more.”

Market highlights

· West Texas Intermediate crude oil drops $21 since May 02, 2012 on European financial worries, US jobs reports and a glut of crude in the markets.

· Saudi Arabia produces close to 10.2 million barrels per day, according to figures from last month.

· US inventories of crude oil continue to climb to numbers not seen since the 1990’s. While gasoline inventory drops, capacity drops as well, keeping gas inventories in line with dropping demand.

Summer outlook

· Oil prices will remain near stable for the next month as markets try to figure out where the markets may be headed. Right now, “stability” is something they’re looking for.

· With the uncertainty of the world and particularly the European financial situation, there is no “motus apparandi” for oil prices to increase, but news isn’t quite bad enough to bring oil prices into another slide quite yet. It seems that what you’ll see after this Thursday’s price change may be about what you’ll see at mid-July for this year, the peak period of the summer tourist season. Give or take about two cents a litre from week to week to a maximum of $1.30/Litre for the summer.

· Oil inventories in the US to continue builds of inventories, ahead of any production cuts. That should be sign enough that US consumers aren’t in a spending mood, especially with a questionable economy. People are going to stick closer to home.

· US demand for gasoline to remain flat. Down by 3.8% at one point last month, refiners have been turning back the spigots in refining to “keep up” with the drop in demand, helping to mitigate too many losses in prices.

· Keep in mind the variables that could change things overnight with my numbers. Any economic improvement worldwide will be enough to start oil prices and their refined products up again, as will any change in the geo-political situation or “Hurricane syndrome” season upon us.

Hope this helps out there!

-30-

That’s it for now!

Regards,

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

Twitter @GeorgeMurphyNDP