The Island Regulatory and Appeals Commission approved the following petroleum pricing decisions, effective 12:01 a.m., Sunday, December 1, 2013:
● Gasoline prices will increase by 2.0 cents per litre (cpl);
● Furnace and stove oil prices will increase by 4.0 cpl;
● Diesel prices will increase by 4.0 cpl; and
● Propane prices will increase by 4.6 cpl for Superior Propane, by 4.1 cpl for Irving Energy Distribution and Marketing and by 4.3 cpl for Kenmac Energy Inc.
Including adjustments for taxes, pump prices for regular unleaded gasoline at self-serve outlets will now range from 130.6 cpl to 131.8 cpl.
The maximum price for furnace oil will now amount to 111.8 cpl plus tax.
Wholesale petroleum product prices have increased significantly since the Commission’s last adjustment on November 1st (Note: no change in prices occurred on Nov 15th). Specifically, the wholesale rack price over the past month has increased by 3.5 cpl for gasoline, by 5.5 cpl for furnace oil and by 4.5 cpl for diesel.
A variety of factors have contributed to this situation. While WTI prices (the crude reference for Western North American crude) have fallen, Brent crude prices (the predominant pricing determinant used by East Coast North American refineries) have actually risen over the past 60 days from $107 to $111 per barrel. Indeed, the gap between Brent and WTI pricing has grown from $6 per barrel to $19 per barrel over this same time period.
The reduced capacity of East Coast refineries over the past two months due to seasonally scheduled maintenance and product switchover has impacted overall market supply and this, combined with noted increased demand, has served to create an upward pressure on wholesale prices.
A continued growth in the export of diesel and furnace oil to Europe, Asia and South America, combined with the approach of colder winter weather, has similarly impacted furnace oil and diesel pricing.
It is hoped that with the anticipated imminent return to normal capacity of refineries in the region, petroleum product inventories will be allowed to recover and wholesale pricing moderation will be observed.
The Commission's next scheduled price adjustment will be on December 15, 2013.