November 15, 2001
(Government Services and Lands)
The following is being distributes at the request of the Petroleum Products Pricing Commission:
1. Petroleum Products Pricing Commission sets regulated maximum pump prices for all brands of gasoline effective November 15, 2001
The maximum pump price for all brands of gasoline is going down across the province by an average of 4.4 cpl. from the levels established in October of this year. Based on the average of Platts numbers for the past 30 days, this represents fairly the decline in prices being experienced on the world markets, as well as taking into consideration the other factors relating to transportation, storage, and distribution costs that impact on the province.
While pump prices in St. John�s and areas will see only a slight decline because of reductions applied during the past week, these new prices effective today, will see significant reduction at the pumps in all other areas of the province. These reductions provided in St. John�s during the past week, while beneficial to residents of the city, were not extended to the rest of the province by the oil companies. This action is indeed disappointing to the commission, but the maximum pricing established today will once again bring prices in line throughout the province. In addition, because of the action of the past week, the companies have clearly demonstrated the need for regulation of fuel prices in Newfoundland and Labrador.
It is the intention of the Petroleum Products Pricing Commission to monitor closely all changes in pricing of both home heating fuel and gasoline during the coming winter months. We ask for the cooperation and assistance of all stakeholders as we attempt to shape stable and fair prices throughout Newfoundland and Labrador.
2. Petroleum Products Pricing Commission regulates home heating fuel � stove oil and furnace oil for all zones in the province
November 15, 2001, is the first time the Petroleum Products Pricing Commission has established maximum home heating prices. The zones for home heating fuels are the same as for automotive fuels. With respect to pricing differentials between the various zones and sub-zones, it is recognized that heating fuels must be delivered to a customer�s home. This necessitates the construction and maintenance of bulk plants from which home heating delivery trucks can draw on to service the surrounding area. Accordingly, the commission has provided an additional price allowance for the cost of operating these fuel depots.
Five new sub-zones established
When regulation became effective on October 15, 2001, it was stated by the Petroleum Products Pricing Commission that the preliminary zones established were open to review through public consultation during the coming winter months. It was also stated that the commission would entertain evidence and consider special circumstances that might exist in each zone. During the past month, we have received a number of requests to consider additional sub-zones based on extra shipping cost. Following investigations and consideration of the evidence submitted from dealers and companies, the following new sub-zones are established:
Sub-Zone 1A � Bell Island as a Sub-Zone of
Zone 1 � Avalon
4. Propane still not regulated
Preliminary research has revealed that very little auto propane use exists in the province at the retail level. Also, it is estimated that there are less than 0.5 per cent of homes heated with propane. Fundamentally, this fuel, except for commercial and industrial use, is used primarily for fireplaces for atmosphere or for space heaters and barbeques at the retail level. Therefore, it will not be regulated at present. However, the Petroleum Products Pricing Commission reserves the right to revisit regulation of propane in the future.
5. Zoning to be maintained for home heat pricing regulation
The zonal boundaries recognized for gasoline regulation in October are also adopted for home heat pricing regulation with additional sub-zones where warranted because of transportation and shipping cost factors. Essentially, there are 14 Zones with nine sub-zones, for a total of 23 pricing variances.
It is important to note that Zone 11 and Zone 14, representing Coastal Labrador North and South have a fixed price established for both stove oil and gasoline that will remain in effect for the entire winter season.
6. Regulation of fuel prices for Coastal Labrador now in effect
Coastal Labrador North and South, known as Zones 11 and 14 are now regulated for the price of gasoline and stove oil. These prices are effective from November 15, 2001 and will remain in effect until supplies are replenished around May or June of 2002.
Furnace oil is not priced for these zones as there is no supply provided and no use determined. Regular unleaded gasoline and low sulfur diesel are the only motor fuels regulated as all other brands are not required or available in these zones.
The Table of Prices will appear in Labrador newspapers this coming week. For information purposes, the price of stove oil in both zones for the winter is 64 cpl. plus HST and for gasoline regular unleaded is 99.2 cpl. while low sulfur diesel is 96.2 cpl included all other taxes.
The high prices on the North and South Coasts of Labrador are necessary to ensure adequate supply of these communities. Operation of depots supplied seasonally by marine tanker is very expensive considering the relatively low volumes of petroleum products consumed. The maximum prices along the Labrador South Coast, which is also supplied by marine tanker, are similar to those on the North Coast. This is justified due to smaller storage and lower volumes per community in the South Coast area.
These prices represent a significant reduction over the recent level of pricing, and this is largely attributed to declining world prices, as well as research undertaken by the Petroleum Products Pricing Commission into transportation, storage, and distribution costs.
7. Price adjustment to be varied in some zones based on further research results
Goose Bay Area: The Petroleum Products Pricing Commission has conducted a detailed investigation of prices in the Central Labrador Area. It has found that because petroleum products are delivered to Goose Bay via large marine tankers that a price reduction of 1.5 cpl is warranted and becomes effective with the November 15, 2001, pricing.
The commission has attempted to address the situation on the Southern Coast of Labrador that has recently been connected by road to the Straits of Belle Isle section. In doing so, the commission took into consideration the fact that there is now a road link with Red Bay. However, the suppliers of petroleum products in the Mary�s Harbour/Port Hope Simpson/Charlottetown areas have still had to fill their storage depots via marine tanker for this winter. It is understood that these suppliers will establish central marine terminals in the area next summer to service the area connected by road. In the meantime, the commission has none-the-less established reduced prices in this area.
The prices for diesel fuel on the Coast of Labrador have been established using stove oil as a basis. All furnace and diesel fuel in Labrador requires the same low pour point as stove oil (ie: -40 degrees)
2001 11 15 10:00 a.m.