Mid week rise in crude to cost consumers
Gasoline to increase, distillates to fall

Media release

Conception Bay South, NL, December 17, 2008- Consumers in Newfoundland and Labrador will experience a slight bump in gasoline prices this week when the Public Utilities Board moves to adjust prices this Thursday.

“The sudden rise of crude oil to near $48 US a barrel Thursday of last week also brought with it an increase in the basic cost price (spot) of gasoline and this is going to affect consumers to a degree. We would have hoped that prices would have kept falling but, bad news and speculation late last week from OPEC and the chance of a major production cut in the offing, both helped to increase spot prices to all fuels. However it is only gasoline pricing that will experience an increase, that amounting to 3.1 cents a litre at the pumps on Thursday”, said George Murphy of the Consumer Group for Fair Gas Prices.

“Numbers show the rapid rise in spot prices that began shortly after the huge adjustment down last week. We also expected to see a much larger drop in distillate prices carrying on from last week but the increase in spot prices mitigated that. Numbers are still showing down by 8/10ths of a cent for heating and stove oils and 1.3 cents a litre down for diesel fuel.

“Since the spike last week, I have recorded a steady decrease, albeit slow, that hopefully will translate into this increase in gasoline as being an anomaly in the petroleum markets. Considering that the markets are now speculating that any OPEC cuts will have no effect on oil pricing, we can hope that there will be further decreases to come for all fuels in the coming weeks. The economic news just keeps getting worse and that has helped to play into market traders fears of lowering demand for fuel products and those fears are slowly translating into fact.”

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For more information, contact;

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

Any comments?

If OPEC cuts production...

Here we go again...

At OPEC's next meeting on December 17th in Oran, it is widely expected that the oil group will institute one of the biggest production cuts that it has ever implemented. Not to be out-done, the group is also asking the wild card in the market, Russia, to meet an "obligation" to help the group put the brakes on the slide in oil prices.

While a distinct possibility that OPEC will bring in a major cut amounting to close to an expected 2 million barrels, I don't expect the Russians to follow suit with OPEC. Russia wants more customers for it's oil and, weaning their way out of any possible OPEC influence just might be the way for the Russians to gain some further world economic influence. Don't expect the Russians to follow suit even though they're just as badly in need of US currency as anyone else. There is a vested interest for the Russians not to follow OPEC's lead as there is to follow the price-fixing cartel.

So, what would the effect be on pricing if OPEC did close the door on some production?

To OPEC, there is no sense in allowing further export of a product that, right now, is in low demand. The danger to OPEC here is that oil will rise again and bring a renewed interest in oil fields that have a higher initial capital cost to them. In other words, keeping the price low would effectively keep other oil fields from being developed. If I were an OPEC member, there can be no doubt that I would attempt to sway fellow members into letting oil freely flow, at least at present levels, and help keep the price of oil low for the sake of keeping other projects off the radar.

Witness Alberta...

With major projects in the oil sands being shelved and workers heading back to their home provinces and countries, it would be a little inopportune for OPEC to help support the price and help keep the projects going. OPEC needs to get these workers out of Alberta and help keep Alberta from being a major supplier to Uncle Sam. It would be a very long re-start before any other fields open in the tar sands if OPEC simply waits the ebb-tide out. That's why it's not likely that Russia won't follow the OPEC lead; there's a chance for the country to gain more influence on oil sales to the US.

December 17th, we'll find out if OPEC will really pull the trigger...

But, if they do cut in the face of the most recent economic news, the markets simply haven't paid OPEC too much attention in the face of a prospect of a two million barrel per day cut. While oil has increased in value by about five bucks since last Thursday's price change, it has since fallen back by another three to sit at $44 bucks US. In other words, while we might see a slight hiccup in prices, it's not likely that OPEC is going to impact price until Russia joins in the fray and then, they both might have more to lose. There's a prediction out there from the International Energy Agency that says consumption of oil will be 500,000 barrels per day less as a result of the downturn in the world economy and they don't have the full scope of the economic damage yet. After all, after losing $103 US a barrel since the first week of July, does anyone?

********************

Six days out of seven show little change in heating/stove oils, just a bare cent down on diesel and a rough 2.9 up on gasoline. I'll have more concrete numbers later tonight so, look out for the press release then!

Regards,

George

Update #3:

An early Christmas present on the way
Consumers to see substantial drops in all petroleum products

Media release

Conception Bay South, NL, December 9, 2008- The numbers confirm it. Interruption to all fuel pricing will occur Wednesday night on heating and stove oils, gasoline and diesel fuels, and the drops there will be substantial, that’s if the numbers that the consumer Group for Fair Gas Prices have been tracking are any indication.

What consumers should expect
“According to the numbers, heating and stove oils will see a drop of 8.25 cents per litre while, gasoline will drop by close to 8.3 cents a litre. The real gift to the Newfoundland and Labrador economy may very well be for diesel as that fuel is projected to drop by a whopping 10.5 cents per litre after taxes are accounted for”, said George Murphy, group researcher for the consumer group.

“We can say fairly that, with the drop in diesel pricing, areas of the Newfoundland and Labrador economy should start to see the removal of some of the fuel surcharges that they were forced to pay for the movement of goods and services that affect the consumers in the province. Diesel prices have now dropped by almost 35 per cent against the peak prices paid in early July. Our fishing industry should be able to catch gains from cheaper transportation costs as well as the difference in the Canadian dollar against the US greenback as well.

“OPEC last week, failed to come to any agreement on any substantial cuts to production as overall demand for oil has dropped along with the ill performance of the world economy. There still lies a chance that OPEC will make some sort of drastic cut when they meet again on December 17th. Some gains in inventories have been realized in recent weeks except for last week, which showed the first draw-downs on available refined products in North America in some time. It is my belief that there is enough available inventory of heating and stove oil inventories to make it through the rest of the winter so, I don’t expect to see any substantial increase in heating and stove oil prices unless OPEC steps in to address world over-supply or demand for distillate fuels show a great increase. Any further drop in refiner capacity which was measured at just over 84 per cent, may also affect distillate supply. A drop in production wouldn’t be surprising if Big Oil knew it would help support the price of the refined product either.

Fuel surcharges
“As the busy Christmas travel season is about to start, consumers should be asking serious questions about the last remaining fuel surcharges on things like air travel and Marine Atlantic ferry rates. It should not be acceptable for Marine Atlantic to let fuel surcharges wait until January to be lifted when they place their orders for fuel at that time. They can easily place an order for fuel now and have the difference in fuel prices reflected back to the amount of inventory then on hand and adjust the surcharges accordingly. Why wait until January to bring relief to the consumer and industry who use the service?

NL Power should adjust pricing
“When will we hear from Newfoundland Power or the Public Utilities Board on any adjustments to electricity with the drop in crude oil prices? It’s about time we hear from them to find out what the consumer can expect to happen to electricity rates in the coming weeks. Businesses will be forced to pay an additional 50 cents an hour to wages and, I’m sure that they can use the savings from electricity rates to help defer the costs of higher minimum wages in these tough economic times. Consumers will also expect to see lower electricity rates to hand in hand with the heating relief program just introduced by the government.

Some crude facts
1) The last time spot prices were this low for heating and stove oils was recorded on September 19th, 2006 when spots hit a then record 48.95 cents a litre.
2) The last time spot prices for gasoline hit this low was on June 14, 2002 when the spot price was recorded at 30.22 cents per litre.
3) The last time crude oil traded close to yesterday’s close of $42.07 US was on July 28th, 2004 when it closed at $42.80 a barrel.

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For more information, contact;

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

Still on track for a big drop in pricing

Update #2

Hi to all...

Six days data out of seven days needed for interruption to occur are now showing the following after todays trading:

1) Heating/stove oils to drop by 8.02 cents a litre.
2)Gasoline down by 8.1 cents a litre, and
3) Diesel down by 9.0 cents a litre.

While oil traded up almost $3.00 a barrel US, the Canadian dollar showed strength and picked up almost four cents against the US greenback. Even though spot prices picked up in value with extensive trading on the markets, the difference in the dollar against Friday's finish was enough to absorb any shock to refined commodity prices and the numbers failed to move when converted over to Canadian values.

I expect the prediction to hold after tomorrow's trading and for the interruption to pricing to happen this Thursday as predicted.

I'll be in touch with an official press release tomorrow night with all seven days of data and the final numbers then.

regards,

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

Interruption to pricing now likely

UPDATE: Looks like all fuels regulated under the guides of the Petroleum Pricing Office will face interruption this week coming. Here's a breakdown of what's likely to occur this Thursday.

You might want to spread the word on this one as the numbers are substantial here:

• Heating/stove oils show 8.0 cents a litre down so far.
• Gasoline shows 8.1 cents a litre down.
• Diesel shows almost 9.0 cents a litre down.

With two more days of information to come, I don't expect the numbers to change too greatly but, be warned that anything could happen out there in the markets and the data could change. They may even be greater than what I have here now.

Regards,

George

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

Prices keep dropping
Gasoline and heating oil prices to see further retreat

Media release

Conception Bay South, NL, December 2, 2008- Consumers in Newfoundland and Labrador will see prices for most petroleum products drop again this Thursday. Oil prices and its related refined commodity prices, continue their slide in the face of worsening economic news and the failure of OPEC to address a market oversupply.

“Prices for gasoline are expected to see another 3.2 cents a litre down this Thursday while heating and stove oils are expected to drop a further 4.2 cents a litre. That number may be slightly off the mark for winter heating oils as they are now subject to a winter heating blend of #2 and jet fuel but, it should be a good indicator of the direction pricing will be taking. Diesel fuels are expected to drop another 1.2 cents a litre”, said George Murphy of the Consumer Group for Fair Gas Prices.

“OPEC has so far, failed to address any over-supply of oil in the market as they did in the run-up to production cuts in the late 90’s. Their failure to cut back on production led to oil prices that hit near $11.00 US a barrel. It was only when oil hit rock bottom that OPEC instituted a round of cuts that saw oil prices rebound. If this is another scenario like this being played out, then there may be no end to the drop in oil prices and there could be some grave consequences to some aspects of the offshore oil industry. It may be good for the consumer however, and that is a positive thing that will also help motivate economic recovery. OPEC will have a regular meeting on December 17th that will, I believe, contain the news of further cuts to production to help stem the fall of oil prices but, it may be ‘too little, too late”.

“Inventory data out of the United States still shows good building of inventories of gasoline as consumer demand remains crimped by bad economic news. This is another week of gasoline inventory gain and only very slight inventory draws of distillate that still is supplying some means of support to heating oil and diesel prices. If inventory starts to build there, we could see further slippage in distillate pricing before the onset of winter.

“Interesting facts are apparent here at today’s price. Spot prices for gasoline are now almost 9 cents a litre cheaper than what they were on May 19th, 2005 while, heating oil prices were almost six cents a litre cheaper than today. Oil on that date was priced at $46.93 against yesterday’s close of $46.96 a US barrel. The retail gasoline price on that date was 99.9 a litre in the immediate St. John’s area. The last time we saw prices below 90 cents a litre at the pumps was the week of January 15th, 2005.”

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For more information, contact;

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

Damned if you do...

Numbers showing down, but ...

In this case, it's just the opposite.

We were on track for a possible bout of 'interruption in pricing' particularly to gasoline pricing until yesterday's market trading and the fall in the U.S dollar agin steps in.

A sudden interest in the stock markets and interest in commodities as the US dollar started falling again, led to yesterday's increase in oil pricing and its related, refined commodities so, from the looks of things, there won't be interruption afterall. Seems that traders will try to take advantage of any situation in the news to try to recoup their losses. In this case, it's a combination of another massive US bailout of the banks and Barack Obama's appointment of his economic team as well that has met with some approval.

Some numbers are still showing "down" however, so, that's the good part. Gasoline and heating oils are still showing that trend for next week.

Either way you look at it, the guys and girls in the provinces' finance department must have breathed a collective sigh when prices increased today...

Consumers to see more breaks for petroleum products
Prices continue to slide, but…

Media release

Conception Bay South, NL, November 18, 2008 - Consumers in Newfoundland and Labrador will be seeing more breaks on pricing of petroleum products this week when pricing is set this Thursday but there should be more savings than what we are seeing at the pumps, that’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Consumers should see another 4.0 to 4.2 cents per litre down on gasoline for the immediate St. John’s area. That will translate to a price of .89 cents a litre for the residents of Conception Bay South. Heating and stove oils are projected to drop by as much as 4.58 cents per litre and diesel fuels will drop close to 4.0 cents per litre this Thursday at midnight when pricing is adjusted by the provinces’ Public Utilities Board Petroleum Pricing Office.

Fuel surcharges should be dropping
“Mariner Atlantic instituted a round of fuel surcharges on passenger and auto traffic last June 12, 2008 on top of a 2 per cent fuel surcharge that was added in June of 2007. The numbers for residual oils are now 32 per cent of what they were back in March, 2008 when they hit their peak. It was in June of 2008 that we saw the additional 27.7 per cent fuel surcharge added based on those numbers. Residual oils reached a peak of $2.73 a US gallon but have since backed down to a rough 88 cents a US gallon. Why are we still paying the surcharge? This is adding to the hardship consumers and business is having in a hard economic time. It is time for Marine Atlantic to return pricing back to the June ’07 level as numbers have decreased to that point.

“As for the airlines, we have seen the price of jet fuel return to August ‘05 levels yet, we haven’t seen a substantial drop in the fuel surcharge on airline ticket fares. When are the airlines going to remove the surcharges they implemented and return ticket pricing back to ’05 levels? This is amounting to a huge financial rip-off to the consumer and business person who requires airline transportation. The airlines along with Marine Atlantic should immediately drop some of the fuel surcharges before the busy Christmas travel season. All these fuel surcharges at this minute add to an artificial inflation rate on consumers in the province and, indeed, to the rest of Canada.

OPEC’s next move
“OPEC is set to meet again at the end of November and I expect another attempt at reducing output by the group. The next regular meeting of the group is set for December 17, 2008 so, this meeting is bringing in the usual concerns of an oversupply in the markets. Consumers should not be surprised to see the group attempt to regain control of world oil supply and, I also predict another cut of close to 750,000 barrels of production.”

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For more information, contact;

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

More drops in pricing on the way

Just to keep you up to date.

With two more days of data to attain, numbers are so far showing more drops to gasoline pricing as well as heating/stove oils and diesel fuels.

Numbers are showing a drop of almost four cents on stove and close to three cents on diesel. The stove oil numbers could be a good indicator of where heating oils will go. Once again, the heating oil mix includes a combination of 75% Jet and 25% number 2 just for the winter heating season and I have not been able to track down an accurate jet fuel number so, this number is more to be used as a rough guide as to the direction heating fuel will be going.

Gasoline is showing almost 3.5 down...

We'll let you all know again about what will come about around 9:30pm this Tuesday night when I'll have all the numbers in....

I'll be in touch...

Regards,

George

UPDATE:

As of Monday evening, I'm now showing definite drops across the board for all fuels.Gasoline shows 3.7 a litre down,heating/stove oils are 4.32 down and diesel down by 3.1 a litre.

I'll give the final numbers Tuesday night, around 9:30p.m......

Consumers to get another break at the pumps
Numbers show interruption to gasoline

Media release

Conception Bay South, NL, November 11, 2008- Consumers in Newfoundland and Labrador should see another break at the pumps this coming Thursday that should bring prices under a buck a litre in most areas of the province, that’s according to George Murphy of the Consumer Group for Fair Gas prices.

“Oil has continued to trade down and that has also been reflected in lower commodity prices, especially for gasoline in the face of weakening demand for the product. Continuing bad economic news and good inventory builds has played into the numbers and that means that gasoline consumers should see a drop of approximately 4.7 cents a litre at the pumps this Thursday morning, if the numbers are right.

“Stove oils and diesels continue to show drops of almost 3.0 and 3.6 cents a litre respectively but it is harder to predict the heating oil numbers with the advent of the winter heating oil mix. A drop is possible there though, in the light of the drops in the market. Consumers should take a ‘wait and see’ approach and gear their purchases after this Thursday accordingly.

“It’s been well over two years since the last time consumers have seen 97 cents a litre in the immediate St. John’s area and it should come as welcome news, should it come to be realized. Just because we are going to see prices drop below a buck a litre doesn’t mean that consumers are good to buy as much as possible however. Consumers should still conserve as much as possible as any consumption can have the opposite effect and help to support pricing rather than see a continuing slide in prices.

OPEC cuts not deep enough?
“Look for OPEC to cut further into their self-imposed production cuts this coming December as oil prices have continued to slide. I expect OPEC to step in and further deepen their cuts by at least 750,000 barrels at their next meeting. That would probably be enough to support pricing at its current level amidst the latest round of bad economic news this past week. OPEC will attempt to put restraint on output and try to influence world pricing.

Government should extend wood pellet rebate program
‘While government has introduced a wood pellet stove rebate program, government should extend the program to include new and advanced technology woodstoves that have become more fuel efficient over the last ten years. Most wood stoves have been improved in recent years that burn wood fuel longer than previously. We also have a small wood supply industry here that is sustainable and we need to provide the incentive to consumers to improve their energy efficiency by providing funding for energy efficient wood stoves. Just because it may be a new industry doesn’t mean that it should be given “carte blanche’ to the wood fuel market. Competition helps to keep pricing down to the consumer and we need to see some of the older technology wood stoves removed to conserve on wood resources as well.

-30-


For more information, contact;

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

Consumers to get a break at the pumps...again!

Hi to all...

Just a quickie as I'm probably going to be doing a cross-island jaunt west again as there has been a death in my family. I have not put together an official news release on this as time just simply won't forgive me.

Not all the data is in but, here's a synopsis of what to expect. I don't think there'll be much change in them between now and Wednesday night.

Numbers
Numbers show 2.39 down on heating and stove oils (13 days out of 14 available), 6.1 down on gasoline (6 out of seven days available) and 4.2 down on diesel (13 days out of 14 available) for this Thursday morning.

Looks like CBS gets the honours of being first under a buck, eh?...lol

Reasons why prices are dropping
1) A drop in world demand and poor world economic performance has resulted in a steep decline in the numbers in recent days and that will result in consumers receiving the benefits of that drop.

2) There has been some moderate recovery in the Canadian dollar and that has played into the numbers. Over the last week, the Canadian dollar has recovered almost nine cents against the US greenback.

3) I believe that the markets have recognised OPEC cuts of last week. While oil has bounced around $65 a barrel over the last two weeks now, their related, refined commodity has shown drops as a result of reduced world demand. Look for OPEC to make another cut of 500,000 barrels at it's next meeting of December 17th as it "pays attention" to the poor economic news and moves to support it's own revenue stream.

4) This might be the last drop in heating and stove oils and we have now reached the point they were for the same timeframe last year when we saw pricing start to rise. We're entering the higher winter demand period and that also means more upwards pricing pressure. I think I would top the tank off now to be sure. In the meantime, another sell-off in the markets might start to make pricing fall again so, take that piece of advice with a grain of salt too...lol

5) My gasoline average shows that there will be possible interruption in prices if market conditions allow for spot gasoline to maintain or further drop in value. If that doesn't happen, as interruptuion requires a four cent average move +/- from the last setting, then consumers can expect to see another drop in prices in two weeks time. My average right now is 48.66 a litre over last weeks range of numbers but yesterday, gasoline traded at 44.23 a litre, a 4.43 a litre difference.
I'll keep an eye and let you all know ahead of time.

Hope this short entry helps?...


Regards,

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

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.”

-30-

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...
-30-

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.”

-30-


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.”


-30-

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

No change to pricing this week

If the price changes at the pumps this week, I don't have it. Even though we've lost some value in the price of a barrel of oil, we really haven't seen a large drop in corresponding spot pricing.

I've been a little busy with newbies in my family this last week so, it's been a case of putting some importance into other things that matter. Normally, I would have posted late last night or earlier this morning but, everything is being backed up here.

Anyways, before I get too far off the topic...

Numbers are showing an "allowable" increase in gasoline based simply on what numbers I have but not enough for interruption to pricing. That little tidbit is based on five of seven days needed to allow the interrupt formula to kick in. We may not get an increase now, but that doesn't mean we won't get it next week. At the same time, there's always some time for spot pricing to back off over the next week too.

In the meantime, heating and stove oils are showing a "down" scenario again. So far, the numbers are pointing down by a mere 1.1 cents a litre, albeit down none-the-less.

One thing I am noticing out of all this "oil dropping" scenario is this: The more we lose on a barrel of oil, the more we lose in value the Canadian dollar against the US greenback. That point so far, means that we can have a better chance of elevated heating and stove oil pricing this coming winter if the trend keeps up. The value of the Canadian dollar is a paramount factor in figuring out how much pricing will be on a day to day basis.

Watch it.

If the US dollar starts to gain value as it has in a couple of days trading last week, then the Canuck Buck will start to lose and consumers won't see the concerted drop in pricing that we've been waiting for.

The perverbial barrel has dropped from a record $147 US to today's $120 US. With that, we've lost a couple more hundredths of a cent because of an oil-based economy.

Regards,

George

On the tail end of last week...
Consumer pricing to drop again

Media release

Conception Bay South, NL, July 29, 2008- Consumers in Newfoundland and Labrador will again see some drops in most petroleum pricing, all this coming on the tail-end of market activity last week.

What consumers will see
“With five days of seven days data needed, consumers will see close to 2.8 cents a litre down on gasoline while heating and stove oils will drop by close to 4.1 cents a litre. The heating-stove oil number may also be an indicator of where diesel pricing may be going as well which will be welcome to the transportation and fishing industries in the province. They’ve been waiting for a long time to see pricing come down.

Cold comfort in the heating-stove oil numbers
“Heating and stove oil numbers have come down in recent days but there is still a long way to come down just to reach year-ago levels. Heating oils will still be 37 cents a litre higher than the same time last year and that’s with this weeks projected drop in pricing included. If we don’t see a concerted drop in oil and related refined commodity pricing, then there is big trouble ahead this winter for consumers. It may be hot outside now but the numbers are providing cold comfort for consumers when looking at last years numbers. There’s still nothing here for consumers to be happy about in spite of recent drops in pricing.

What will oil do in the next little while
“OPEC production is picking up in spite of a drop in demand in recent weeks and that figures heavily this week as we see the numbers change in the consumers favour again. OPEC member Saudi Arabia was responsible for some increase in available crude oil on the markets as the OPEC country promised an added 300,000 barrel increase in June and added another 200,000 starting this July. That second oil increase will make its play in the markets shortly and we’ll see a small move back to the US dollar as an investment rather than commodities-at least for the time being. That may mean some slight relief to come for consumers as both demand and inflation weigh in on overall consumption and the high price of oil plays as a mitigating factor in consumer purchases.

Other factors remain in play
“Consumers still have to be on guard for other conditions that remain in play in the markets. We still have the promise of world geo-political situations like Nigeria and the Middle East and Iran that can show their ugly head at any time as Nigeria did in yesterdays market play. We still have Hurricane Syndrome playing in the markets as well with the markets playing with weather conditions and possible supply and refining disruptions in the Gulf of Mexico. Traders will use anything right now, to help support oil pricing rather than see a decrease caused by market actualities in the future.”

-30-

For more information, contact;

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

First notice...

Numbers pointing down again

Funny title for an article I know...

More to come on this one but, just to let you all know, I'm tracking drops in gasoline and heating-stove oils from the tail-end of market activities last week. Numbers so far, are showing about three cents down on gasoline and four down on heating-stove oils.

Watch the blog Tuesday morning for more coverage on what these numbers will be. I'll have something a little more definitive as the days go by but, remember, anything can happen in the markets on Monday-Tuesday to strike a reverse in things.

Let's keep the fingers crossed...

Regards,

George

Interruption possible for all fuels
Recent market activity warrants the use of interrupter formula

Media release

Conception Bay South, NL, July 22, 2008 – Consumers in Newfoundland and Labrador can expect to see the use of the Petroleum Pricing Office’s interruption formula this week as all numbers are showing that gasoline and heating-stove oils have met the criteria required.

“Consumers can expect to see the use of the formula for gasoline as well as for heating and stove oils. I also expect that diesel will also fall under the criteria based simply on the most recent market activities. When oil pricing loses as much as it did last week, then you also expect for the related refined commodity to do the same,” said George Murphy, group researcher and member of the Consumer Group for Fair Gas Prices.

“With five of seven days data at hand, I have gasoline to drop by 9.9 cents a litre and heating-stove oils to drop by 7.7 cents a litre. Initial numbers showed a 9 and 6 scenario was the more likely based on the first two days data. The heating oil number may be a good indicator of where diesel may be going as well. We now have five days and that’s why the numbers have changed. I expect there to be little change when the other two days data become available.

“Markets for oil traded down based on the troubles the markets are seeing with the world economy right now. We’re facing economic slowdown, a drop in consumer demand overall and that has led to some tidy gains in oil and commodity inventories. The previous fears of an economic blockade against Iran and it’s pursuit of a nuclear program abated somewhat and the possible supply disruption scenario from that area was gone from the traders basis for the elevated price. Hence, the consumer will see some relief in pricing this week.

“We know that high pricing has become an undue hardship for a lot of people and we’ve written a note to the Public Utilities Board asking them to pass these substantial savings on to the consumer in this province ahead of the ‘scheduled’ interruption price change to consumers. We want these savings passed to consumers for Tuesday midnight instead of the Thursday implementation just to bring emergency relief to consumers out there. Based on the performance of the dropping price in other markets, I think we should like to see something happen here sooner rather than later.

“Right now, some markets have seen corresponding drops in numbers where there is still competition in the areas involved. Some areas of Toronto have seen pricing drop by as much as what I have on paper for this area now. We need to see some redress to consumers and being as extraordinary situation as we’ve seen in the markets since last Tuesday; I feel that the consumer in Newfoundland and Labrador deserves to see the break early.”

-30-

For more information, contact;

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

By the way, be sure and leave any comments you might have. They all help... whether constructive...or not...lol