NLIS 1
October 25, 2005
(Government Services)
The following is being distributed
at the request of the Public Utilities Board�s Petroleum Pricing
Office (PPO):
Effective 12:01 a.m. Tuesday, October 25, 2005, the Public Utilities
Board, through its Petroleum Pricing Office, will reduce the maximum
price of furnace/stove oil in Newfoundland and Labrador (NL) by 2.96
cents per litre (cpl).
The interruption formula criteria used by the board to make interim
pricing adjustments were met for furnace/stove oil. This follows a
similar adjustment by the board in decreasing the maximum price of
gasoline by 4.1/4.2 cpl on Sunday, October 23. The criteria have not
been met for automotive diesel and residential propane used for home
heating, and there will be no change to the maximum prices of these
regulated fuels at this time.
Many of the same factors that led to the decrease in the maximum
prices for gasoline have contributed to this decrease in
furnace/stove oil prices.
The most recent event that impacted refined fuel prices on NYMEX
(New York Mercantile Exchange) was the fact that Hurricane Wilma was
forecasted to miss the crude oil and refining region in the Gulf of
Mexico. It eased fears among market traders that no major
disruptions to the available fuel supplies would occur as a result
of this massive weather system.
This news was complemented by recent reports that refined petroleum
products inventories are rebounding after many of the refineries
damaged by recent hurricanes in the U.S. are restoring operations
and concerns over tightening production capacity are being
alleviated. Distillate fuel supplies, which include furnace/stove
oil and diesel, fell last week; however, they are still in the
lower-than-average range for this time of year. There remains the
distinct possibility that price fluctuations may occur once the
northern hemisphere enters its winter season and traditionally the
demand for home heating products increases.
BACKGROUNDER
Regulated fuel prices are adjusted on the 15th of each month using
the average daily prices for finished petroleum products as listed
on NYMEX (New York Mercantile Exchange). In the event of volatile
behaviour between normal price adjustments, the interruption formula
is used by the board based on specific criteria to make upward or
downward interim price changes as warranted in the marketplace.
For the interruption formula to be used on gasoline, diesel or
furnace/stove oil, price fluctuations on the New York Mercantile
Exchange (NYMEX) must exceed an average of � 3.5 cpl over a five
market business-day period. Adjustments are then made where price
increases or decreases are warranted. In the case of residential
propane, Bloomberg�s Oil Buyer�s Guide weekly figures must exceed a
� 5.0 cpl change over five days.
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