NLIS 9
June 15, 2004
(Government Services)

 

The following is being distributed at the request of the Petroleum Pricing Office:

Maximum prices released effective June 15: Business as usual

The Petroleum Products Pricing Commission has been officially integrated with the Public Utilities Board (PUB), and the transition process to consolidate the entities is well under way.

The operation, which is based in Grand Falls-Windsor, will now be called the Petroleum Pricing Office. It is moving forward with the job of regulating the prices for refined petroleum products sold at the wholesale and retail levels in the province.

David Toms, acting director for the Petroleum Pricing Office, agrees there has been some speculation about the future of fuel-price regulation in Newfoundland and Labrador. However, he emphasized that the approach to regulating fuel prices in the province will continue as it has in the past using the same formulas and policies.

"It�s business as usual for this office when it comes to petroleum price regulation," said Mr. Toms, who has been involved in fuel-pricing regulation at the Grand Falls-Windsor office since 2001. "We see the move to integrate our office with the Public Utilities Board as being very positive and this office will continue to play a beneficial role for all stakeholders."

JUNE 15 REGULATION

Maximum fuel prices throughout the province (with the exception of Zone 10a � Mary�s Harbour to Cartwright where the price freeze was lifted May 28) have remained unchanged since May 15, despite the fact that world markets for oil and petroleum products reached near-record highs.

Increased fuel prices at the beginning of this pricing period were the result of several factors, including: the start of the peak demand season for gasoline; continued fear that the increase in demand for fuel, particularly gasoline, would not be met by low inventories; inadequate refining capacity; ongoing violence and terrorist attacks in the Middle East driving concerns about oil delivery disruptions; and improving economies, specifically in the U.S. and China, creating higher fuel consumption patterns than in the past.

World markets have experienced a sharp decline in recent days. A major contributing factor to this activity was the commitment from OPEC (Organization of Petroleum Exporting Countries), led primarily by Saudi Arabia, in early June to increase output quotas. This resulted in reducing concerns about fuel supply availability and allowed a boost in U.S. gasoline production. The Energy Information Administration (EIA) is also reporting improved inventories, particularly for gasoline, though they remain under what is considered a comfortable volume for peak summer demand.

The Petroleum Pricing Office�s regulatory model has to incorporate all the market activity since May 12. Subsequent pricing could have warranted an upward adjustment using the interruption formula. Because this adjustment did not occur, the high prices continued to play a prominent role in calculating June 15 figures, and have only recently been offset by the downward trend on the world market. However, the interruption formula will be applied in future should the criteria be met.

Effective 12:01 a.m., Tuesday, the price for all types of gasoline will decrease 0.4 cents per litre (cpl). The distillate fuels will see increases � home heating fuel by 2.26 cpl and diesel by 2.3 cpl. Residential propane used for home heating purposes will also adjust upward by 2.5 cpl.

While the prominent story in recent weeks has been high gasoline prices, the impact of escalating crude oil prices did not escape other refined petroleum products, such as home heating fuel. Therefore, the average behaviour of pricing during the past 30 days indicates the need for an increase in home heating fuel, diesel and propane, as well as a nominal decrease in gasoline in the province at this time.

LABRADOR

Fuel prices in Zones 11 (Coastal Labrador - South) and 14 (Coastal Labrador - North) have been frozen since Nov. 15, 2003.

Effective June 15, the Petroleum Pricing Office will lift the freeze. The price for all types of gasoline in these zones will increase by 19.6 cpl, home heating fuel by 8.31 cpl and diesel by 10.2 cpl.

The new maximum prices are calculated based upon the current benchmark price used in Zone 1 (Avalon) plus the associated costs used to move the products to these areas.

Media contact: Michelle Hicks, Communications, 1-866-489-8800 or (709) 489-8837.

1.Automotive Fuels - Maximum Retail Pump Prices - Effective June 15, 2004 
2. Heating Fuels - Residential Propane - Maximum Tank Wagon Prices - Effective June 15, 2004 

3. Heating Fuels - Maximum Tank Wagon ( or** Tank Farm) Prices - Effective June 15, 2004

2004 05 15                                       2:05 a.m.


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