NLIS 2
October 31, 2005
(Government Services)
The following is being distributed at the
request of the Public Utilities Board�s Petroleum Pricing Office (PPO):
Gasoline and diesel fuel prices
decrease
Effective 12:01 a.m. Sunday, October 30, 2005,
the Public Utilities Board, through its Petroleum Pricing Office, decreased the
maximum allowable price for automotive fuels in Newfoundland and Labrador (NL).
The criteria for the board�s interruption formula were met for these fuels,
resulting in a reduction of 5.8 cents per litre (cpl) for all grades of
gasoline, as well as a 2.1 cpl decrease for diesel. The criteria for making
these interim adjustments were not met for other regulated fuels, i.e.,
furnace/stove oil and residential propane used for home heating purposes.
The downward trend for gasoline and diesel on NYMEX (New York Mercantile
Exchange) continue to decline from the record levels experienced in the recent
past.
A myriad of factors have helped to lower market gasoline prices at this time,
including: Hurricane Wilma missing the oil production and refining areas in the
Gulf of Mexico that are still recovering from previous hurricanes; increased
production of gasoline to near pre-hurricane levels, despite the fact that a
significant portion of U.S. refinery production capacity remains shut; increased
imports of this fuel aimed to offset any shortages created by the spin-off
impact of recent weather events; and, a drop in consumption that has helped
boost available supplies. Many of the factors that contributed to the recent
volatility in prices are gradually subsiding, and in the absence of other
unforeseen events may now sustain greater stability in the commodities market
for gasoline.
On the other hand, distillate inventories, which include diesel and
furnace/stove oil, have reportedly not recovered as quickly as gasoline. While
production has increased for distillates, demand has also kept pace particularly
with the on-set of colder weather. Concerns regarding expected winter demand
continue to surface among commodity traders, as distillate stockpiles are in the
lower end of the average range for this time of year and production capacity is
tight. Future price signals for distillate products remain unclear and will
depend on how market conditions unfold in the weeks ahead.
BACKGROUNDER
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.
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 market business-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.
Automotive Fuels � Minimum Retail Pump Prices - Effective October 30, 2005.
Media contact: Michelle Hicks, Communications, 1-866-489-8800, (709) 489-8837
2005 10 31
10:05 a.m. |