NLIS 5
July 17, 2006
(Government Services)
Gasoline, propane slated
for increases; distillates decline
The following is being distributed at
the request of the Public Utilities Board�s Petroleum Pricing Office (PPO):
Effective 12:01 a.m. Saturday, July 15, 2006, the Public Utilities
Board, through its Petroleum Pricing Office, established new maximum
fuel prices throughout Newfoundland and Labrador (NL) as per its
scheduled mid-monthly adjustment.
For automotive fuels, maximum gasoline prices increased by 5.1 cents per
litre (cpl), while diesel prices were lowered by 0.9/1.0 cpl � depending
on the HST rounding effect for a particular pricing zone. In the case of
home heating fuels, maximum furnace/stove oil prices were lowered by
1.34 cpl, and residential propane prices rose by 2.2 cpl.
The commodities market has experienced pricing volatility, at times
daily, throughout this entire four-week period. This activity not only
saw prices move upward dramatically, but also recoil periodically.
Despite this erratic behaviour, maximum fuel prices in this province
have remained relatively stable.
It is hoped that future pricing will enable further stability; however,
this condition is difficult to predict over the long term, given the
volatility that is currently being experienced in the market. The board
notes the regulatory system in this province is designed to balance the
needs of all stakeholders in providing a fair price to consumers for the
products, while reflecting the realities of the global marketplace in
ensuring a continuing supply of fuels to all residents of Newfoundland
and Labrador.
CONDITIONS
NYMEX (New York Mercantile Exchange) commodity prices continued to
reflect the influence of increased demand for fuel in industrialized
countries, particularly gasoline, despite persistently high prices. As
well, conflicts in major oil-producing countries (such as Iraq, Iran,
and Nigeria) could have a negative affect on future fuel-supply
availability.
With any spike in demand comes the worry about whether or not existing
or future supplies will be able to keep up with the rise in consumption,
especially when the market is considered extremely tight. Analysts are
closely watching possible events such as hurricanes, geopolitical
conflicts, refinery outages and supply disruptions - any of which could
occur unexpectedly - and their potential impact on commodity pricing.
Reaction thus far has been mixed to news that either offset these
concerns or helped to propel them.
The EIA (Energy Information Administration) weekly U.S. inventory
reports have shown increases in gasoline inventories during the past
three out of five weeks, with a decrease this past week, and remained in
the middle of the average range.
Diminished demand for heating oils also placed some downward pressure on
distillate fuels, as inventories show these fuels above the average
range for this time of year. On the other hand, the increase in demand
for automotive diesel, which belongs to the same group of fuels as
furnace/stove oil, and escalating prices for crude oil, which reached a
new intraday trading highs, have played significant roles in keeping
these products� prices high.
Geopolitically, nuclear activity in Iran and North Korea was also a
factor in driving fuel prices during this period, though there was some
question by analysts whether these marked increases were justified. Iran
refused to cease its nuclear enrichment program, and North Korea set off
several test missiles earlier this month, both of which raised concerns
from Western leaders about these countries� intentions.
BACKGROUNDER
Fuel-price regulation: Maximum regulated fuel prices are adjusted on the
15th of each month using the average daily prices for most finished
petroleum products as listed on NYMEX (New York Mercantile Exchange),
plus the appropriate conversions using the daily noon-day exchange rate,
wholesale and retail margins, as well as taxation, when applicable. 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.
HST impact: The rounding effect of the HST (Harmonized Sales Tax) may
create a slight variation in the magnitude of price changes in each zone
for gasoline and diesel fuels. Please refer to the price tables related
to this announcement to determine the maximum price for your area.
1. Automotive Fuels � Maximum Retail Pump Prices � Effective July 15,
2006
2. Heating Fuels � Maximum Tank Wagon (or ** Tank Farm) Prices �
Effective July 15, 2006
3. Heating Fuels � Residential Propane � Maximum Tank Wagon Prices �
Effective July 15, 2006
Media contact: Michelle Hicks, Communications. Tel: 1-866-489-8800 or
489-8837.
2006 07 17
1:25 p.m. |