Petroleum Pricing Office makes early pricing adjustment for distillate fuels
The prices for distillate fuels (home heat and diesel) on the New York Mercantile Exchange (NYMEX) in recent days have reached the point where an interruption is warranted in the normal pricing schedule for those fuels in the Newfoundland and Labrador regulated market.
David Toms, (acting) director with the Board of Commissioners of Public Utilities Petroleum Pricing Office (PPO), said the market is continuing to demonstrate how sensitive it is to any event that could potentially impact the availability of already tight fuel supplies.
For instance, he noted, recent tropical storms in the Gulf meant some refineries either temporarily shut down because of possible power outages or curbed production due to delays in petroleum product deliveries. This helps to explain the reports of significant declines in U.S. inventories, as there was a need to draw upon existing stocks to meet contract demands.
In fact, added Mr. Toms, the situation has led the U.S. government to decide it will loan crude oil from its strategic petroleum reserve to some refiners to address shortfalls.
High crude oil prices are being reflected in the market prices for the fuels refined from it, such as gasoline, distillates and propane. These petroleum products are traded individually, which is why the use of the PPO interruption formula can vary for each.
“We have a system in place in this province that ensures a means, through the interruption formula, of dealing with dramatic movements in the market such as those we’ve seen in recent days,” said Mr. Toms. “The regulatory system is not only here to bring stability to the market for consumers, but it also has to attempt to address concerns of fuel suppliers in this province so they are able to continue providing fuel.”
Whenever NYMEX market prices for gasoline and distillate fuels increase or decrease an average of 3.5 cents per litre over five business trading days (providing it doesn’t interfere with the normal pricing schedule), the PPO will use its interruption formula to make early price adjustments.
In this case, the criteria have been met for home heating fuel and diesel. As of 12:01 a.m. Sunday, Sept. 26, the maximum allowable price for diesel will increase by 4.0 or 4.1 cents per litre (cpl) – depending on the HST rounding-off effect in a particular pricing zone - and home heat by 2.82 cpl.
There will be no adjustments made to any of the other fuels regulated by the PPO at this time.
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Media contact: Michelle Hicks, Communications. Tel: (709) 489-8837.