April 1, 2003
(Government Services and Lands)
The following is being distributed at the request of the Petroleum Products Pricing Commission:
For the second time in as many weeks, the Petroleum Products Pricing Commission (PPPC) will interrupt its normal model of regulation to adjust fuel prices, with the exception of gasoline and residential propane.
PPPC research director David Toms, who is overseeing the office while commissioner George Saunders is on vacation, said world markets have been extremely sensitive over the past couple of weeks, especially since the war in the Middle East has intensified, and this has resulted in the activation of the commission�s interruption formula.
Effective 12:01 a.m. Tuesday, April 1, 2003, the prices for distillate fuels will decrease � No. 2 blend furnace oil by 5.79 cents per litre (cpl), stove oil by 6.03 cpl, and diesel by 7.1 cpl.
There will be no change in the price of gasoline or residential propane used for home heating purposes.
Mr. Toms noted the price for distillate fuels has declined over the past week, and that can be mainly attributed to the end of the home heat season and a decreased demand for the fuel.
Another factor affecting fuel prices is the refineries� shift in production from distillates to gasoline, as they attempt to build their inventories of automotive fuels from historically low levels. As the home heating season ends, the expectation of an increased demand for gasoline is emerging, and this is a driving factor in the prices for both refined products.
Mr. Toms said there were some fluctuations in the prices for gasoline and propane in the world market over the past week, but they weren�t enough to meet the criteria of the interruption formula developed by the commission to address major sudden and sustained increases or decreases in fuel prices.
"We are closely watching the markets, which seem to react to any positive or negative news on an hourly basis, and the situation has reached the point where anything can throw global pricing off balance," said Mr. Toms. "With the situation as it is, we can expect uncertainty on the world scene when it comes to fuel prices, and the commission will respond when necessary, yet at the same time, provide stability in this province."
Media contact: Michelle Hicks, Communications officer, 1-866-489-8800, (709) 486-4789.
The Petroleum Products Pricing Commission (PPPC) released the results of its internal review March 14, 2003, and among the recommendations was the introduction of an interruption formula.
This formula is designed to address any major sudden and sustained increases or decreases in fuel prices.
In the case of gasoline and distillate fuels (furnace oil, stove oil and diesel), the interruption formula becomes effective when the benchmark price increases or decreases an average of 3.5 cents per litre (cpl) or more for five consecutive business days.
Residential propane figures come from a separate source than all other regulated fuels; therefore, it was determined there was a need for a different interruption price for propane. The interruption formula is activated if the benchmark price of propane moves up or down an average of 5.0 cpl or more as is currently averaged each week using Bloomberg OBG (Oil Buyers� Guide).
When these criteria are met, the commission will change the price based on the average difference from the previous adjustment.
2003 04 01 9:00 a.m.