Board adjusts fuel prices

David Whalen
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Mixed bag for consumers as gasoline prices increase; furnace and stove oil drops

Drivers will have noticed that the price of gas climbed by more than a cent today.

Gasoline prices around the province rose by 1.2 or 1.3 cents per litre overnight. At the same time, ultra low sulphur diesel decreased by 4.9 cents per litre, furnace and stove oil decreased 5.54 cents per litre, and residential propane went down 2.6 cents per litre.

The Newfoundland and Labrador Board of Commissioners of Public Utilities, the public body that sets gas prices, said declines in the global price of crude oil were offset by declines in the value of the Canadian dollar and by heavy summer demand, keeping gas prices from lowering in kind.

Drivers across the province are paying more today to fill up their vehicles while consumers of furnace and stove oil get a little break following an adjustment by the Newfoundland and Labrador Board of Commissioners of Public Utilities. - Telegram file ph

Drivers will have noticed that the price of gas climbed by more than a cent today.

Gasoline prices around the province rose by 1.2 or 1.3 cents per litre overnight. At the same time, ultra low sulphur diesel decreased by 4.9 cents per litre, furnace and stove oil decreased 5.54 cents per litre, and residential propane went down 2.6 cents per litre.

The Newfoundland and Labrador Board of Commissioners of Public Utilities, the public body that sets gas prices, said declines in the global price of crude oil were offset by declines in the value of the Canadian dollar and by heavy summer demand, keeping gas prices from lowering in kind.

The Canadian dollar, long hovering at parity with the U.S. dollar, has fallen to about US$0.94. The board said the fall in value helps keep Canadian gas prices high, even though oil prices have finally started to drop.

"Just as the rising Canadian dollar shielded us on the way up, a falling Canadian dollar hurts us on the way down," said David Hillier, a research analyst with the board's Petroleum Pricing Office.

Hillier said demand for diesel fuel has long been kept high by expected high future demand in developing economies, especially China and India. Those prices are dropping now because actual demand has been less than expected.

George Murphy with the Consumer Group for Fair Gas Prices had predicted a roughly 2.5 cent rise in gas prices. "We knew it was coming, but we thought it would be a little more substantive than that," Murphy said. "It's a little bit disturbing that the Canadian dollar can have such an effect on oil and gas pricing, but that's the way it is."

Murphy believes prices will eventually drop at the end of summer.

"I think that it would probably turn around and reverse and go the other way come September when everybody goes back to work," he said.

Murphy is encouraged by the drop in diesel, stove oil and propane costs, but predicts costs will eventually increase again as oil prices are likely to go back up in the near future.

"This may be the period of time in which you're going to see the bottoming out in numbers," Murphy said.

david_whalen@hotmail.com

Organizations: Newfoundland and Labrador Board of Commissioners, Petroleum Pricing Office, Consumer Group for Fair Gas Prices

Geographic location: U.S., China, India

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