The battle shaping up...

Interesting, to say the least!

In an almost unprecedented move, Asian countries have now joined in what appears to be a global move to bring energy prices downwards to spur economic activity and recovery.

Seems to be a recognition out there from governments that OPEC's long-standing goal of keeping oil prices up is going to be a hard job.

The United States and some European countries rallied together on Thursday to release some of their crude oil reserves to the world markets, not long after OPEC met, to meet a shortfall of global crude stocks and in an effort to bring down the price of oil to bolster economic recovery. OPEC failed to increase production the other day that would have dropped crude oil prices, but the meeting to discuss production increases amongst member countries failed, spurring the move by western countries.

Brent crude shows a drop so far today by close on $1.40 a barrel, while West Texas Intermediate is down slightly by close on sixty cents. Not a big lot, but it's starting to show on refined commodity prices.

I'll be in touch, but it's off to the west coast of the province Monday.

Regards,

George

Enter the governing council!

Good news out of Libya this evening may prove to be good news for consumers down the road.

Tesoro Energy out of the United States have signed with the governing council in eastern Libya for the first shipment of crude oil to leave Libyan waters since the start of unrest there a few months ago.

Libya is a chief exporter of crude oil from North Africa, exporting almost 1.5 million barrels of oil per day, that is, before the "revolution" started there.

The deal is for an initial purchase of 1.2 million barrels.

Any added crude oil to the markets at this point should be just enough to mitigate any increases for a little bit.

We'll see what happens.

Story here.

George

Up and down in the markets

Gas prices down, but distillate fuels up

Media release

Conception Bay South, NL, June 07, 2011- Consumers in Newfoundland and Labrador will find evidence of the 'up and down' to the markets this week when the Public Utilities Board adjusts prices this Thursday morning. That's from George Murphy, group researcher with the Consumer Group for Fair Gas Prices.

"Numbers are reflective of what happened with inventories late last week when data showed a drop in distillate fuels and a gain for inventories of gasoline," Murphy said."It's been all over the map since, with no real sign of stability. Oddly enough, inventories of crude oil increased by 2.9 million barrels even though there was an increase in refinery production, reaching a full 86 per cent, the highest level in weeks."

The numbers

"Heating and stove oils show upwards movement by 1.03 cents a litre. Diesel should increase by 1.5 cents. That is probably in line with inventory reports that showed a drop in distillate inventories by close on a million barrels. Someone is burning a lot of distillate fuel out there, most likely diesel fuel."

"Gasoline is showing the opposite: down by 2.6 cents a litre. Gasoline inventories were up last week by 2.6 million barrels for the week, probably the reason behind the drop in prices.

Oil prices may drop

There are also strong signs that OPEC member countries are getting ready to ramp up production, citing the need to keep the world economy moving in the face of slow, or even falling economic recovery. The group of producers led by Saudi Arabia, are presently meeting in Vienna.The talk is about adding 1.5 million barrels of crude oil per day to present production quotas. If that happens, it could be a plus to helping prices drop. The Saudis are concerned that high oil prices will further damage world economic recovery and they're pushing fellow OPEC members to help drop the price of oil to a more 'manageable' seventy to eighty dollars US a barrel from it's present level of around the hundred US level it presently sits at.

But there is another cause for concern.

"If the group does raise quotas, then that leaves spare refinery capacity at a minimum while Libyan production is off-line with ongoing political turmoil. Libyan production matches that of the proposed OPEC production increase: 1.5 million barrels per day. The difference here is in the interpretation of the news here. Investing agencies are concerned with losing capacity when consumers are saying that capacity is there. Just not online at this moment. I believe we're close to a retreat in prices, especially if demand for gasoline and distillate fuels stagnates."

"We'll wait and see."

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For more information, contact;

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

*Just a footnote to this story really. demand for gasoline products this past week was recorded at 1.3% lower than the same recording period for last year. That's pretty important to see at this time, and another sign of probably what's coming.

Hi to all...

Sorry that this one is posted later than the usual, but I didn't get in until late tonight, a little later than the usual. I hope you all forgive me.

George

Prices on a steady move upwards
Consumers to see another slight increase to prices

Media release

Conception Bay South, NL, March 10, 2010- some more slight upwards moves in petroleum prices will be the order of the week to consumers again when the PUB adjusts prices this coming Thursday. That’s according to George Murphy of the Consumer Group for Fair Gas Prices.

“Again, investors are beginning to speculate on economic recovery, albeit in sporadic fashion, as they try to maximize returns for the future. I expect to see consumers paying slightly more when prices are adjusted upwards this week as a result,” Murphy said.

“Numbers show only a 49/100ths of an increase coming for heating and stove oil prices, and an increase of another penny to both gasoline and diesel fuel prices. It may be another small increase but the last few increases add up to a larger number that is beginning to make an impact on consumers spending. Any increase that becomes measurable like these last few have totaled will shortly begin to impact demand as consumers sense that prices are not staying down. They’ll begin to hold back on other purchases, making an impact on any economic recovery. There are already signs that this is occurring.

Industry report shows increasing crude oil inventory
A report today from the American Petroleum Institute (API) shows that the US crude oil inventories probably increased by close on 6.5 million barrels. The report comes ahead of the US government Energy Information Administration (EIA) report that is expected to show an additional two million barrels of inventory for last week. “If that is the case, then we can expect to see lower trading in commodities and a corresponding drop in prices in the coming week. We should also see traders making investments in the US dollar rather than the Euro and commodities. It all depends also on the inventory status of refined commodities rather than raw crude,” Murphy said.

Beware the Ides of March
OPEC meets in Vienna next week to discuss its pricing policies and also to discuss production from its member nations. With any sign of a drop in consumer demand, the possibility is there that there could be a production cut in the offing. We’ll find out March 17th if this will be the case. The last thing OPEC will want is to institute a cut though, as it could hinder any economic recovery perceived to be ongoing.

Marine Atlantic receives a budget tidbit-A suggestion
Marine Atlantic received an infusion of funds with the O’Flaherty budget this past week, bringing with it the promise of an update to the service fleet, but is there a possibility that any of the money could be used for another purpose?

“I’m hoping that Marine Atlantic could take some of that money and help itself, and consumers too, by infusing some of that money to alleviate the pain of added fuel surcharges to ferry traffic. If they lowered prices by doing this, perhaps they would increase user traffic as a result and then positively affect their own bottom line. One of the problems that added fuel surcharges has is that it adds an artificial inflation rate to anything coming into the province, or leaving it. Newfoundland and Labrador businesses need the stability in transportation prices that can be achieved by doing this. Besides being seen as a possible economic recovery measure, is it possible that we could increase tourist traffic by lowering ferry rates as a result of making a move like this? I believe it would.”

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For more information, contact;

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

Not much change in prices this week
The real oil news may be later this week

Media release

Conception Bay South, NL, February 9, 2010- There won’t be any big changes to fuel prices this week as oil and commodity prices showed a slight gain, erasing any possibility of a more substantial cut in prices. That’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

Numbers are down slightly
“Numbers are showing drops in all fuels I measure but I only have it in tenths of cents. Heating and stove oils show 29/100ths down, gasoline is 3/10ths down and diesel shows the largest decrease at just a half penny,” Murphy said.

“While crude supplies increased slightly last week that was offset by an increase in investors sinking their money into the US dollar as a hedge against inflation. They pulled their winnings from commodities amidst a drop in demand for oil. The Canadian dollar also lost a penny in value against the US dollar as a result. The real news for consumers may be signaled later today when the US government releases its inventory data. If it also shows an increase, oil will drop along with the price of refined commodities and there are plenty of signs out there that it will.”

Tankers idle
Iran has several tankers loaded and ready to go to world markets, but they have a problem. The tankers have no place to deliver as the markets are now signaling a drop in demand for oil and rather than ship the oil out for a cheaper price, the Iranians are using the tankers for storage in the hope that prices will rebound before the next OPEC meeting.

OPEC meets March 17th in Vienna
The Organization for Petroleum Exporting Countries (OPEC) will meet in Vienna next month to discuss production targets. The possibility is there that OPEC will discuss a cut in production if oil prices keep slipping amidst the bad news coming from the world economy. Any drop in the world economy will signal a drop in demand for oil and that brings about the possibility of a production cut to help support prices.

Industry report indicates inventories gain
The American Petroleum Institute (API) is reporting a gain in inventories of most crude oil and refined products this week. The industry organization’s report shows that supplies of crude oil increased by a very substantial 7.2 million barrels and gasoline also increased by 1.6 million.

“Hopefully, the positive news here will mean a drop in the coming weeks for consumers but, the news still has to face some confirmation in a report by the US Energy Information Administration (EIA) report scheduled to be released tomorrow. If their report shows anything of an increase in supply, then we should look for oil to trade lower again in the next week,” Murphy said.

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For more information, contact;

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

OPEC ideas with oil prices might change your mind

If the Saudi Arabian oil minister is right, and OPEC succeeds in jacking up oil prices well above the July, 2008 record of $147 US a barrel, what would you think?

Good for the Newfoundland and Labrador treasury?

Good for the environment?

Just the other day, a CBC news story quoted Ali al-Naimi as saying that oil prices could surpass the record by the year 2012. In a nutshell, a boon for the OPEC nations that comes with much trepidation and concern for the consumers in North America and indeed, worldwide.

Consider this...

As oil prices hit the record of $147.23 a US barrel last July 7th, consumers were also facing the elevated price of heating oils that hit close on $1.24 a litre. The record heating oil price came close to killing the local heating oil industry here, leading to some radical changes in the ownership of the local dealers. Some retailers sold out leaving the industry here dominated by big oil rather than being influenced by the mom and pop operation.

If OPEC succeeds in driving prices in excess of the old record, will OPEC also succeed in killing the heating oil industry? Will we see an enforced conservation because people simply will not be able to afford to buy heating oils?

What of the affect on gasoline or diesel prices?

No doubt that pricing for refined commodities would hit the roof. The fact that OPEC is even of this way of thinking is both alarming, and a foreboding of the possibility of things to come if you're a heating oil user.

I don't think there's any consolation in OPEC's way of thinking and the provincial treasury simply would not be able to keep up even though the treasury would like the influx of cash. The reality is that OPEC is stepping on insecure ground and it's actions like driving up the price of oil could do more to impact demand by the consumer.

They could end up sshooting themselves in the foot...

But really...Isn't it time that Canadians insulate themselves from OPEC?

Your thoughts?

Slight changes coming for fuel prices
Gas is up a little, distillates showing down

Media release

Conception Bay South, NL, April 21, 2009- Consumers won’t see too many changes in fuel pricing when they are set this coming Thursday morning by the Public Utilities Board, that’s according to George Murphy of the Consumer Group for Fair Gas Prices.

What consumers will see this week
“Numbers haven’t changed a great deal over the past two weeks. The markets are at an impasse as it weighs demand against bad economic news. It’s almost like everyone is waiting for something to happen and nothing is”, said Murphy, researcher for the consumer group. Gasoline shows an added 8/10ths of a cent up while the distillates are down. Stove oils are down by 1.26 cents a litre and that could be the way of heating oils. Diesel is also set to drop by 1.2 cents.

Watching Marine Atlantic
“I’m keeping a close eye to the marine fuel numbers as they come in. They are now hanging close to where they were back in 2005, which was the year previous to any added surcharges on passenger fares. With the drop in distillate demand in recent months, it’s going to be interesting to see what Marine Atlantic will do even though we still have to go through another two months of market trading before they come to a decision on adding fuel surcharges once again. In the near term, I don’t feel there will be an increase forth-coming in June as the bad economic news does not provide that upwards pressure to pricing.

Focus off distillates
“Consumers should expect to see a gradual decline in stove, diesel and heating oil prices for the next few weeks. Diesel, an important transportation fuel, will still be susceptible to some chance of upward movement, particularly if refiners continue to cut back on capacity. We have more to fear from inventory draw-downs on gasoline that will help stabilize the price, if not increase gasoline prices slightly in the weeks leading up to the US Memorial Day holiday. We’ll be able to make a summertime prediction on peak gasoline prices by then.

OPEC to meet again
“OPEC has set its next meeting for May 28, 2009 in Vienna. The group will meet again to discuss the current economic situation and talk about the possibility of further cuts to production. It may all be for naught. Figures from the International Energy Agency show that OPEC compliance with its own self-imposed quota has been weak as of late. The group produced almost 770,000 barrels a day more than its 4.2 million barrel cut over the last year. The numbers are even more telling when last weeks report from the US Energy Information Administration reported a good build in crude oil inventory alongside draw-downs of refined products. We could be on the verge of another collapse in crude oil prices if we see more increases in crude oil inventory and continuing weak compliance with quotas.”

-30-

For more information, contact;

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

Numbers confirm prices will rise
Consumers to see an increase in pricing Thursday morning

Media release

Conception Bay South, NL, January 6, 2009- Consumers in Newfoundland and Labrador will experience something they haven’t seen in a while, a price increase to most petroleum products. All indicators point to the Public Utilities Board using its interruption formula to adjust prices this Thursday morning.

“All the numbers are in and they’re not good. As of Tuesday’s market close, consumers in the province will likely see an added 5.94 cents on heating and stove oils, 6.8 cents a litre up on gasoline and 8.0 cents a litre up on diesel fuel”, said George Murphy, group researcher with the Consumer Group for Fair Gas Prices.

“This is a substantial increase caused by market investors playing with the same factors we saw in the run-up in crude oil prices a few years back. We’ve been told for a long time now, that supply disruption concerns have always had a built-in price factor. We’re also seeing investors doing exactly what caused the world economic problem as well; investing in oil without regard for the damage high oil pricing can cause the world economy. They have literally removed some disposable income from the pockets of consumers everywhere.

“We’re seeing them play with OPEC cuts and making bets that they’ll stick and cause a shortage of crude in the markets while we haven’t seen the rest of the bad economic news. They’ve bet on a drop in supply when they should have been betting on a drop in consumer demand. Here’s hoping the investor loses his bet come February.”

-30-

For more information, contact;

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

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

"The Perfect Storm scenario"

Why prices might even crash...

I know...

Seven days showed a 3.9 cent a litre increase and still a decrease for stove and heating oils. Guess they were close...

It made me sick too, just to look at the pump as I drove by. I didn't need any as I topped it all off the night before...

It's my way of putting the screws to Big Oil before they get to do it to me later in the week when I'm back on "w" for "walk".

But, if the storm in the markets has anything to do with it, we just might see a drop at the pumps before the summer driving season hits and we hit the "expected' spike in prices for the summer.

You shouldn't take for granted everything these professional oil analysts are thinking. You might "get use" to what they say and then you'll have to pay the piper.

And that's the reason for this particular post; because I don't take what they're shoving at me for the truth. Matter of fact, I think there's something that the "investor" is not telling you...

If the refining industry is having such a tough time with their refiner margins and oil is becoming hard to acquire because of price, then it must be obvious to the consumer that they are "purposely" keeping capacity down in order to support the retail price to the consumer, right?

If that is true, and prices have climbed to the point that overall demand is being broken and people start to conserve, then that creates a build in inventories right?

Then the following must be true...

Less demand means less need for refined product which in turn means less refining. That would also mean a drop in demand for the raw crude oil product. We have to note here that crude inventories climbed last week possibly because of part of what we're saying here; that crude simply costs too much to buy by the refiner and inventories were allowed to build in the hope that prices may be impacted...

That means there's evidence of an attempt to support gasoline and heating oil prices by the refiner and Big Oil; a "supported" price...

While the price may indeed be supported, there's not a heck of a lot of return for the investment...

What the markets need to see now, or should I say, the consumer needs to see, is the proof that inventory is building and that demand is being impacted. That may bring down the house of cards that OPEC helped create.

We have already reached a point where Big Oil has hit the Law of Diminishing Returns because of rampant investment in commodities like gasoline and heating oils. consumers here in Newfoundland and Labrador have been hard hit this winter with "above normal" heating oil prices. The elderly and those on fixed incomes as well as pensioners, are at the point where they are buying no more.

They now choose food over heat.

I think they like to call it "energy starvation"...

I think that we're going to start to see investors in distillates lose a lot of money...

One can always live in hope...

Regards,

George

Still projecting increases across the board

Update

February 19, 2008- Numbers are still showing that consumers here in Newfoundland and Labrador along with the rest of North America, will be hit with increases to all consumer petroleum products. Consumers here can expect the pounding to begin this coming Thursday morning so, the word is to get to the pumps by midnight Wednesday.

Five days out of a possible seven needed for interruption to fuel prices show an allowable of 5.2 cents a litre increase while, heating-stove oils are showing 3.75 cents a litre up.Allowing for my 3/10ths of a cent margin of error, expect those fuels to increace as well. The Public Utilities Board allows a four cent a litre movement up or down, before they will interrupt pricing.

According to what I have,that will be done early on all fuels I monitor.

Whether you blame OPEC for thinking they'll have to cut back production, the traders on the New York Mercantile Exhange for seeing an opportunity to make a buck or a refinery fire in Texas, expect that Big Oil will be turning the thumb-screws to you shortly...

More tomorrow as another day's data will be available!

Regards,

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