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

Petroleum Pricing Office makes early adjustment to home heating prices

Ongoing volatility in prices for refined petroleum products on the world market means an early adjustment will have to occur on home heating prices in Newfoundland and Labrador before the August 15 regular pricing schedule.

The Board of Commissioners of Public Utilities Petroleum Pricing Office (PPO) used its interruption formula (IF) to change the maximum allowable price for regulated diesel fuel this past Tuesday, and the criteria has been since met for an interruption on home heating fuel.

Home heat (furnace/stove oil) and diesel are both distillate fuels that are produced from crude oil; however, because each are created using different refining processes, the costs associated with each fuel and the maximum prices that can be set for them vary.

Effective 12:01 a.m. Friday, August 6, the price for home heating fuel will increase by 2.24 cents per litre (cpl).

The criteria for a price interruption on other fuels regulated by the PPO have not been met, and no adjustments are necessary for gasoline, diesel or residential propane at this juncture.

David Toms, PPO director (acting), said the same circumstances that created the environment to increase diesel prices earlier this week are at play when it comes to this home heating fuel price change.

"A host of factors are making fuel prices extremely unstable at this time," he said. "The high cost of crude oil is moving the prices for refined petroleum products, which we use to establish our maximum prices, upward. We are seeing the impact of this situation in such a way that individual fuels under our jurisdiction are meeting the interruption formula at different times. 

"However, the public can be assured that these adjustments are justified and in keeping with our mandate of ensuring fair and objective pricing," he added.

Included among the factors affecting fuel prices on the world markets are:

the dispute between the government in Russia and the nation's top oil exporter, Yukos, which holds the potential for a substantial fuel supply disruption;

• speculation about other possible threats to fuel supply availability coming from Venezuela and the Middle East;
• an increased demand for fuel at a time when adequate fuel supplies and inventory availability are being questioned;
• refiners' ability to meet this increased demand, while trying to rebuild stocks for the upcoming home heating season; and,
• distillate fuel supplies are lower than normal and are slow to rebound because refiners have shifted production to meet increased gasoline demands.

  Heating Fuels Maximum Tank Wagon (or ** Tank Farm) Prices - Effective August 6, 2004

  Media contact: Michelle Hicks, Communications, 1-866-489-8800 or (709) 489-8837
  
  2004 08 06                                     11:35 a.m.