PETROLEUM PRICING

Charlottetown, Prince Edward Island, January 16, 2009 — The Island Regulatory and Appeals Commission approved the following petroleum pricing decisions, effective 12:01 a.m., Friday, January 16, 2009:

• Gasoline prices will increase by 4.3 cents per litre (cpl);
• Furnace and stove oil prices will increase by 3.3 cpl;
• Diesel prices will increase by 2.4 cpl; and
• There will be no change in propane prices at this time.

Including taxes, pump prices for regular unleaded gasoline at self-serve outlets will now range from 76.8 cpl to 78.9 cpl.

Despite a relatively substantial drop in crude prices, wholesale refined product prices continue to increase. While crude prices have fallen in excess of $7.00 per barrel since the beginning of the year, wholesale prices for gasoline and furnace oil have increased by 9.2 and 8.8 cpl respectively over this same period. The situation while appearing counterintuitive is, nonetheless, a current market reality. Bearing in mind that wholesale prices are set outside of the Commission's jurisdiction on a daily basis and that the Commission's posted prices on PEI are in effect for upwards to 15 days at a time, substantial wholesale margin losses can accumulate in times such as experienced during the first two weeks of January.  While the Commission attempted to address this situation on January 10 by increasing posted prices at the time by 5.0 cpl, sustained wholesale margin erosion has necessitated the additional adjustments announced today.   

The Commission's next scheduled price adjustment will be on February 1, 2009.

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