September 16, 2002
(Government Services and Lands)


The following is being released at the request of the Petroleum Products Pricing Commission:

Regulated fuel prices released for September 15 to October 15, 2002

Despite a volatile situation on the world market over the past month, people in Newfoundland and Labrador will see a decrease in the price of gasoline at the pumps over the next 30-day period.

The Petroleum Products Pricing Commission (PPPC) has just released its maximum prices for fuel for September 15 to October 15, 2002, and depending on which pricing zone you live in, there will either be a 0.3 or 0.4 cent per litre (cpl) decrease for unleaded gasoline.

The main reason for this variance is the impact of rounding off HST calculations in the overall fuel price.

George Saunders, PPPC commissioner, said the decrease in the price of gasoline occurred because of an ongoing instability in the marketplace, which not only saw large increases in the price of refined oil product throughout the past month, but also significant decreases that served to balance the situation.

He noted the price variation during this round of regulation is very slight, and because of the controls put in place by his office, the commission is able to maintain a stable atmosphere in a precarious world market.

"Stability is one of the mandates of this commission when it comes to pricing," said Mr. Saunders. "The current round of regulation is demonstrating our ability to maintain stability in our province."

Supply and demand factors have impacted the calculation of diesel and home heating prices. Diesel will see a 3.4 cpl increase during this period of regulation, and home heating fuel will rise by 2.6 cpl.

"There are uncertainties in the market regarding the availability of fuel over the coming months," said Mr. Saunders. "The companies need to ensure they have adequate supply to meet future demands on their fuel stocks."

The commissioner said oil companies are currently building their stocks of diesel and home heating fuels, referred to in the industry as distillate fuels, with the anticipation of an increased demand once the winter season sets in, coupled with a fear of a cutoff of supply should unrest develop in the Middle East. Prices for these products have risen approximately 10 per cent over the past 30 days.

Another factor playing a role in fuel price fluctuations is the threat of war action against the Middle East, especially in the period leading up to September 11, which is also the cutoff date for the PPPC when calculating its daily average for regulation.

OPEC ministers will meet in Osaka, Japan September 19, and the participating countries will attempt to agree on crude production and price strategies for the winter. At issue is whether or not to maintain current production quotas levels under the current 21.7 million barrels per day or to raise production to ease prices. The new target production levels set by OPEC will impact the ongoing price of crude oil, and eventually all petroleum products in the marketplace.

In the meantime, propane fuel will change by 2.2 cpl. This price is benchmarked based on world prices.


The PPPC conducted research during a fact-finding tour in Zone 8 (Northern Peninsula - Gros Morne to Belburns) August 22-24 to determine the impact of a proposed boundary change on stakeholders and to determine where the new boundary should be if a change were to be made.

Mr. Saunders explained that most retailers in Zone 8 had to sell below maximum retail prices for the zone and put them at Deer Lake (Zone 6) prices even though they purchased their fuel at the maximum wholesale price of Zone 8.

The PPPC determined the movement of petroleum products in the area affected dealers, companies and wholesalers and a change to the zone boundary was necessary.

Last month, Zone 6 included the Deer Lake and Corner Brook areas. The boundary will now extend to include Gros Morne.

Prior to September 15, Zone 8 was described as including the Northern Peninsula - Gros Morne to Belburns. Now the zone will be known as the Northern Peninsula - Lobster Cove, Gros Morne National Park to Belburns.

1. Automotive Fuels - Maximum Retail Pump Prices - Effective Sept. 15, 2002 
2. Heating Fuels - Residential Propane - Maximum Tank Wagon Prices - Effective Sept. 15, 2002
3. Heating Fuels - Maximum Tank Wagon (or ** Tank Farm) Prices - Effective Sept. 15, 2002

Media contact:

Michelle Hicks
Communications Officer
Petroleum Products Pricing Commission
Tel: (709) 489-8837
Cell: (709) 486-4789 (voice mail available)

2002 09 16 11:22 a.m.

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