In response to the disastrous impact of Hurricane Katrina on North American oil production, the Island Regulatory and Appeals Commission today authorized unprecedented increases in petroleum prices—unprecedented both in terms of the level of the price increase and the timing, coming one day after a regular pricing announcement.
Wholesalers have been authorized to immediately increase prices in their dealer and consumer schedules by 23 cents per litre (cpl) on gasoline, 9 cpl on diesel fuel, and 9 cpl on furnace and stove oil. The prices for regular unleaded gasoline at self-serve outlets will range from between 134.2 and 136.2.
Maurice Rodgerson, Chair of IRAC says, “Hurricane damage has generated massive increases in petroleum prices leaving the Commission with no choice but to take further action. As indicated when prices were set for September, the devastation caused by Hurricane Katrina was being assessed and that impact was not factored into the price increases announced just yesterday. We now have additional data which clearly supports the record increases announced today. There has been extensive damage to the supply system and markets are reacting with Canadian price increases of over 24 cents per litre within the last 24 hours. Prince Edward Island can not isolate itself from these impacts, and must protect the Island supply system.”
The Gulf of Mexico area produces about 1.5 million barrels of oil a day. Ninety percent of that production is shut down. Nine refineries are shut down. Twenty percent of the crude oil imported into the United States enters through the area hit by the hurricane and is shut down. Details on the exact extent of the damage and recovery time are not known. This comes at a time when world prices were already rising and production and refining were operating at full capacity. All of these factors will continue to create price uncertainty.
The Commission acknowledges the impact on both consumers and those involved in the petroleum industry. These massive price fluctuations cause anger and frustration. The Commission will continue to review product pricing on a daily basis and will institute price changes as warranted. If detailed reports indicate minimal damage to the production system, prices may moderate; if they indicate extended shutdowns, prices may continue to rise.
The detailed retail and consumer pricing schedule are available on the Commission’s website at www.irac.pe.ca