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NLIS 1 May 15, 2004 (Government Services) The following is being distributed at the request of the Petroleum Products Pricing Commission: Maximum fuel prices released effective April 15: Commissioner expresses concern over looming fuel-price crisis The world market continues to yield high prices for oil and refined petroleum products, and George Saunders, head of the Petroleum Products Pricing Commission (PPPC), said this spells crisis for people in this country unless something is done globally to counteract the situation. The commissioner said regulation has been able to produce stability and a true reflection of market conditions in its maximum pricing for Newfoundland and Labrador. However, because PPPC pricing is calculated based on the NYMEX (New York Mercantile Exchange) commodities market, this province cannot expect to be shielded from circumstances that are impacting the rest of North America. "Our prices have been stabilized for the most part because our system sees time periods during which people can wake up in the morning and know the maximum price that can be charged for fuel," he said. "Exceptions occur during volatile times when the commission has to adjust prices before the 15th of the month." Record highs for oil and gas prices were reached this past week, as demand is increasing in an ongoing tight supply market coupled with fears over possible future fuel shortages. Even so, suggested Mr. Saunders, the public can continue to remain confident that what�s being charged for fuel in this province is accurate and fair given market conditions. "Regulation was never implemented to produce low prices, but we are achieving what it was set up to do - ensure fair and realistic prices," he noted. "The past 30 days is evidence that regulation is working. Unregulated markets have had daily price jumps which saw them post prices higher than ours for some time now. In the meantime, this province has been able to hold the line. For example, last week, we were below the Canadian average for fuel prices excluding taxes." Effective 12:01 a.m., Saturday, May 15, the price for all types of gasoline will move upward by 7.4 cents per litre (cpl). The added cost of blending jet fuel with No.2 furnace oil, which has been in effect since November 15, 2003, will be removed at this time. The resultant impact is an overall decrease in furnace oil prices by 1.61 cpl. Other regulated fuel prices that haven�t been adjusted since April 15 will now see some movement. Stove oil will increase by 3.04 cpl. The price for diesel fuel will rise by 3.2 cpl and residential propane used for home heating purposes will go up by 1.9 cpl. "If Newfoundland and Labrador wasn�t a regulated market at this time, I wouldn�t want to guess what the price for fuel would be," said the commissioner. "And I have to advise people to be prepared; this situation could remain for some time unless something happens on the global market to ease prices." Economic Impact The commissioner said he is extremely concerned about the impact continued high fuel prices will have on the economy. "The economy is booming in most parts of this country, the U.S. and in China, which means an increase in demand for things such as fuel," said. Mr. Saunders. "Add that to all the violence in the Middle East and the fact that there aren�t enough refineries to keep up with the expected demand and what you have is a recipe for an extremely volatile petroleum market. "The analysts are saying this is going to continue for the entire summer and the public should get used to it," he noted. "I believe if this happens, it will be detrimental to the overall economy. The impact will spill over into the cost of other goods we receive, as well as have a negative effect on our disposable income for this necessary commodity and other purchasing decisions the public makes, particularly for low-income earners." People are encouraged to curb their consumption patterns as much as they are able, he added, as there is a possibility an energy crisis similar to those of the 1970s and 1990s may again come to the forefront. "Though the choice to live an opulent lifestyle lies in the hands of the public, they had also best be prepared to pay for those choices," said Mr. Saunders. Competition Bureau The federal competition bureau stated that an examination of the Canadian petroleum market began May 4 to determine whether increases in retail gasoline prices may have resulted from a breach of the Competition Act. It will also look at whether the price increases result from a "conspiracy among oil companies to fix or co-ordinate prices or other anti-competitive practices by one or more dominant firms in the industry, or whether there could have been some other explanation such as worldwide and/or North American supply and demand changes." (Competition Bureau release, May 7) While Mr. Saunders said he has little confidence that this endeavour will yield any effective results, he noted the federal watchdog would best concentrate its efforts away from past behaviours in the market and develop a better method of pricing petroleum products in Canada. "If they could find a better way than the industry standards that are used today, then maybe something can happen to produce lower prices," said the commissioner. "As long as industry is tied to commodities market pricing, the cost of fuel will remain high in this country and they could remain over $1.00." 1.Automotive Fuels - Maximum
Retail Pump Prices - Effective April 15, 2004 Media contact: Michelle Hicks, Communications, 1-866-489-8800 or (709) 489-8837. 2004 05 15 11:05 a.m. |
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