December 15, 2003
(Government Services and Lands)
The following is being distributed at the request of the Petroleum Products Pricing Commission:
Maximum fuel prices released effective December 15, 2003
Fuel prices have experienced a roller coaster ride on the world markets over the past 30 days, but the end result for Newfoundland and Labrador is an overall minimal change in prices and continued stability.
George Saunders, commissioner for the Petroleum Products Pricing Commission (PPPC), noted that this province has experienced a lengthy period of relative stability because of regulation. This was achieved, he added, despite the fact oil prices have exceeded the $30 mark for some time � well above OPEC�s (Organization for Petroleum Exporting Countries) $22 to $28 target range.
"The current pricing adjustments we are making reflect the stability of the markets at a higher level, as world prices are reported to be up 18 per cent from a year ago," noted Mr. Saunders.
As of 12:01 a.m., Monday, December 15, 2003, maximum fuel prices are as follows: all types of gasoline will increase 0.7 cents per litre (cpl); distillate fuels (home heat and diesel) will also see slight adjustments upward � stove oil by 1.21 cpl, No. 2 blend furnace oil by 1.42 cpl and diesel by 1.0 cpl; and residential propane used for home heating purposes will decrease by 1.2 cpl.
It should be noted these pricing adjustments will not occur in Zones 10a (Mary�s Harbour to Cartwright), 11 (Coastal Labrador South) and 14 (Coastal Labrador North) as the price freeze is in effect.
World petroleum market activity following December 12, 2003 (the beginning of the period used by the PPPC to calculate December 15 prices) saw prices encounter a high rally because of concerns over sufficient supplies to meet the expected winter demand, as well as ongoing unrest in the Middle East.
This interval of higher prices was followed by a downward turn because of unseasonably warm weather which eased fuel demand and OPEC�s reported inability to enforce production cuts it mandated for December 1, 2003. Also, behind the price decline, was a belief expressed by analysts in Bloomberg News (December 25) that prices were too high given OPEC and other exporters� production levels.
Prior to OPEC�s meeting in Vienna December 4, 2003, there was a small period of price increases, but that changed once the group responsible for producing one-third of the world�s oil supply determined production quotas would stay the same.
Prices were boosted again when the recent winter storm hit along the northeastern seaboard and there was an increased demand for fuel, particularly heating oil.
Overall, gasoline prices have changed little, as inventories are relatively low and the use of gasoline continued to remain higher than normal beyond the regular peak seasonal demand period.
Refiners have shifted their attention to the production of distillate fuels, as inventories are still trying to rebound after harsh winter conditions over the past couple of years. A mild autumn stalled demand for distillate fuel, but that is slowly starting to change, as the cold weather moves into the northeast region of North America � among the largest user of heating fuels.
"We were just hit with our first winter storm and that will impact production patterns for heating fuels," said Mr. Saunders. "As per seasonal market behaviour, we can expect the increased demand over the next while will be on home heating fuel."
Automotive Fuels - Maximum Retail Pump Prices - Effective December 15, 2003;
Media contact: Michelle Hicks, Communications. Tel: (709) 489-8837 or Cell: (709) 486-4789.
2003 12 15 10:35 a.m.