August 15, 2003
(Government Services and Lands)
The following is being distributed at the request of the Petroleum Products Pricing Commission:
Commission releases maximum prices effective August 15, 2003
Unlike many other regions in the country, Newfoundland and Labrador has experienced a summer with minimal fuel price adjustments.
In fact, August 15 marks the first time in five months the Petroleum Products Pricing Commission (PPPC) will make a significant increase in gasoline prices. The only other gain during that period was 0.6 cents per litre (cpl) in July.
Effective 12:01 a.m. Friday, August 15, the maximum price for all types of gasoline will increase by 4.2 cpl. Diesel will experience a 2.5 cpl movement upward, and heating fuel will rise by 2.14 cpl.
Conversely, residential propane used for home heating purposes will decrease by 0.5 cpl.
PPPC commissioner George Saunders said the Newfoundland and Labrador market has been able to maintain relative stability in gasoline prices over the past few months because of regulation.
World market conditions have created a volatile situation during the last 30 days such that fuel prices made a marked upswing, and that activity had an impact in this province though prices remained unchanged.
The commissioner noted that at the beginning of the 30-day period used to calculate this round of prices, the PPPC was close to making an early interruption of its regular schedule, as was the case last week. But prices retreated slightly in both instances making an intervention unnecessary.
As a cautionary note, Mr. Saunders doesn�t rule out the possibility of having to use the commission�s interruption formula to adjust prices upward or downward if conditions warrant before September 15.
Several factors have affected fuel prices over the past few weeks, and at the forefront has been the delay in the return of Iraqi oil exports to pre-war levels. Currently, daily production is one-quarter of that in February.
"There have been many international factors at play that have contributed to increasing prices overall on the world market," said Mr. Saunders. "Much of the activity is reflective of normal summertime demands, but other emerging elements are also working their way into pricing. Newfoundland and Labrador has been fortunate that we�ve been able to hold the line for the past few months on gasoline. This is further evidence that regulation is working in this province."
Also keeping world prices high is the strong seasonal demand for gasoline in a recovering United States economy, low inventories, and a five per cent increase in consumption of fuel in China (the world�s fastest-growing economy) over last year.
However, Mr. Saunders said the time of the year for a shift in demand for gasoline and its production is nearing, and refiners will soon work to rebuild their home heating fuel stock in preparation for the upcoming winter.
Distillate fuel supplies (furnace/stove oil and diesel) are reported to be at extraordinarily low levels after North America�s unusually cold winter last year, and this has resulted in elevated prices at this time.
Mr. Saunders said no one can predict what�s going to happen on the world scene, but the commission will continue to fulfill its mandate of providing stable and fair pricing throughout this province.
1. Automotive Fuels
- Maximum Retail Pump Prices - Effective August 15, 2003;
Media contact: Michelle Hicks, Communications. Tel: 1-866-489-8800; (709) 489-8837; Cell: (709) 486-4789.
2003 08 15 8:35 a.m.