April 15, 2004
The following is being distributed at the request of the Petroleum Products Pricing Commission:
Maximum fuel prices released effective April 15
Activity on the world market in recent weeks has been anything but flat when it comes to fuel prices. In fact, prices have seen wide and erratic fluctuations during the past 30-day period. Overall, there has been an environment of high prices on the world market because of concerns over future fuel supplies and current record demand, particularly for gasoline. As well, periodic decreases were recorded because of reports that inventories were rebounding and the peak demand for other fuels, such as home heat, has passed.
Also playing a role in creating a volatile market in recent days is the increase in Middle East violence, which has caused concern about oil shipments and the fear that pipelines and other facilities may be targeted during the unrest.
The OPEC (Organization of Petroleum Exporting Countries) meeting in Vienna March 31 is another factor that contributed to fuel price variations. Market figures leading up to the meeting were reactive to analysts� speculation on what the group would do about production levels during a time of calls for lower prices. OPEC decided to reduce its oil production quota April 1 by 4.1 per cent to offset what they believe will be a glut in the second quarter that, if left unchecked, could mean a drop in prices.
For Newfoundland and Labrador, a high price per barrel of crude oil on the New York Mercantile Exchange (NYMEX), which hasn�t gone below $30 U.S. per barrel this year and even reached a high of $38, coupled with fluctuating prices on the commodities exchange for refined petroleum products, have translated into diverse results for this round of regulation by the Petroleum Products Pricing Commission (PPPC).
Effective 12:01 a.m. Thursday, April 15, the maximum price for gasoline will increase by 1.0 or 1.1 cent per litre (cpl) depending on the rounding effect for prices in a particular pricing zone.
All distillate fuels regulated by the commission will see price decreases. Furnace oil will decline by 1.60 cpl, stove oil by 0.79 cpl and diesel by 0.6 cpl.
Residential propane used for home heating purposes will also see a downward adjustment of 3.7 cpl.
The public may be surprised that the price increase for gasoline isn�t as significant as many have speculated, said PPPC commissioner George Saunders, given the reports from the U.S. and associated markets that demand and prices at the pumps have reached record highs in recent times.
But, he added, the averaging system used in the formula to regulate fuel prices can be credited with ensuring a stable price for this province.
"In unregulated areas, there have been wild fluctuations in fuel prices because of the extremely volatile nature of the market since the new year began," explained the commissioner. "The price for crude oil has been high, but our office looks at the market price for refined petroleum products when calculating figures. The prices for these commodities have also seen sessions of highs mixed with short-lived lows. Increased demand leading up to the usual peak usage season is certainly playing a major role in driving gasoline prices, and should this activity continue, one can expect the elevated prices to remain."
The home heating season is considered to have passed, though consumption of these products in this part of the country will continue until the warmer weather begins. Mr. Saunders said inventories for this fuel are sufficient at this time because of a lacklustre demand for the fuel, as reported by the EIA (Energy Information Administration), due to the slighter higher-than-average winter temperatures along the east coast in comparison with the same period one year ago.
The mild winter has also allowed refiners to build residential propane stocks. Inventories have had a good showing in the east coast and Gulf regions. This, combined with a decrease in demand, has translated into a reduction in the maximum price set by the PPPC.
Fuels - Maximum Retail Pump Prices - Effective April 15, 2004
Media contact: Michelle Hicks, Communications. Tel: (866) 489-8800 or (709) 489-8837. Cell: (709) 489-4789.
2004 04 15 8:45 a.m.