March 5, 2004
The following is being distributed at the request of the Petroleum Products Pricing Commission:
Commission interrupts pricing schedule for gasoline adjustment
For the first time since September 25, 2003, when a decrease in the price of gasoline was made, the Petroleum Products Pricing Commission (PPPC) will use its interruption formula to make an early adjustment on gasoline prices in Newfoundland and Labrador.
The next scheduled regulation would normally be on March 15, but world market activity and volatility of gasoline prices have created a situation where an early adjustment was warranted.
Effective 12:01 a.m., Friday, March 5, the maximum price for all types of gasoline will increase by 3.3 or 3.4 cents per litre (cpl) depending on the effect of the HST.
No adjustments will be made on any other fuels regulated by the commission at this time because they do not meet the criteria for the commission�s interruption formula. George Saunders, PPPC commissioner, said sustained significant increases in world prices over a short period of time has been a cause for concern when it comes to gasoline prices. If it were not for regulation in this province at present, higher prices would have already been in effect especially during the past month.
"Our goal is to ensure that the prices in Newfoundland and Labrador are kept as fair and stable as possible given the circumstances that are currently unfolding in the world market," he said. "We know the prices are high, but we also realize that this is a true reflection of current global market conditions."
Since the commission last set the maximum fuel prices February 15, the market has seen an upswing in pricing in the face of low inventories and low reserves.
In the case of gasoline, there has been an ongoing fear that the already low available inventories will not be rebuilt in time to meet the upcoming demand season. Also playing a factor in driving prices is the fear that, if any problems arose that require more refined petroleum products, there is little available capacity to meet an increased demand or be able to respond to difficulties that would require higher levels of gasoline supplies.
According to Bloomberg news, there has also been a strong consumption of gasoline in recent weeks which has hampered efforts to replenish reserves.
As well, there has been a continued decline in refinery crude-oil processing for gasoline which has contributed to increasing prices. This, coupled with seemingly unrelenting higher prices for oil, has kept the markets at elevated levels.
According to the U.S. Energy Information Agency (EIA), not only were gasoline inventories low in the U.S., but imports are lower than last year�s levels.
The PPPC will continue to monitor fuel prices closely and will resume its normal regulation on March 15.
Media contact: Michelle Hicks, Communications, (709) 489-8837 or 1-866-489-8800, cell: (709) 486-4789.
2004 03 05 8:55 a.m.