NLIS 1
October 11, 2005
(Government Services)
The following is being released at the request
of the Public Utilities Board�s Petroleum Pricing Office (PPO):
Gasoline prices increase
Effective 12:01 a.m. Saturday, October 8, 2005,
the Public Utilities Board, through its Petroleum Pricing Office, increased the
maximum allowable price for all grades of gasoline by 4.4 cents per litre (cpl)
in Newfoundland and Labrador.
Barring any extraordinary events, there will be no further price changes for
fuels regulated by the board until its regularly scheduled adjustment October
15.
This is the second time in as many weeks the board has used its interruption
formula to increase maximum gasoline prices because of continuing market
volatility resulting primarily from the aftereffects of Hurricane Katrina and
Hurricane Rita. While refined fuel prices on the commodities exchange
experienced some downward movement during the latter part of this past week,
higher market prices at the outset of the period, more than compensated for
these lows.
Regulated fuel prices are adjusted on the 15th of each month using the average
daily prices for finished petroleum products as listed on NYMEX (New York
Mercantile Exchange). In the event of volatile behaviour between normal price
adjustments, the interruption formula is used by the board based on specific
criteria to make upward or downward interim price changes as warranted in the
marketplace.
MARKET UPS/DOWNS
NYMEX prices September 28-30, the beginning of this pricing period, demonstrated
how vulnerable the market continued to be as a result of the recent hurricanes
in the Gulf of Mexico. Gasoline and home heating fuels traded near their highest
levels since Hurricane Katrina struck and shut a good percentage of U.S. crude
oil and fuel production.
Ongoing concern for limited refinery capacity remains prominent, as closed and
damaged refineries are taking some time to resume operations, and existing
facilities are attempting to rebuild depleted gasoline supplies as well as
produce and stockpile heating fuels for the upcoming colder months in the
northern hemisphere.
Market prices also experienced some periods of relief in recent days. An
increase in U.S. imports of fuel and crude oil created a slight ease on the
market, which was enhanced by news that the U.S. Strategic Petroleum Reserve,
the world's largest supply of emergency crude oil, would release additional fuel
to help offset any production shortages to the market. It was also reported that
high fuel prices are likely curbing fuel consumption and decreasing demand.
BACKGROUNDER
For the interruption formula to be used on
gasoline, diesel or furnace/stove oil, price fluctuations on the New York
Mercantile Exchange (NYMEX) must exceed an average of � 3.5 cpl over a five-day
period. Adjustments are then made where price increases or decreases are
warranted. In the case of residential propane, Bloomberg�s Oil Buyer�s Guide
weekly figures must exceed a � 5.0 cpl change over five days.
1. Automotive Fuels � Maximum Retail Pump Prices �
Effective October 8, 2005.
Media contact: Michelle Hicks, Communications. Tel: 1-866-489-8800 or (709)
489-8837.
2005 10 11
9:40 a.m.
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