Falklands : OUTSIDE FACTORS CAUSE LOCAL HEATING FUEL RISES
Submitted by Falkland Islands News Network (Juanita Brock) 06.05.2011 (Article Archived on 20.05.2011)
A recent rise in heating fuel costs, just before the winter season, has caused concern in the local community. On Monday morning people became aware of the following:
OUTSIDE FACTORS CAUSE LOCAL HEATING FUEL RISES
By J. Brock (FINN)
A recent rise in heating fuel costs, just before the winter season, has caused concern in the local community. On Monday morning people became aware of the following:
Fuel price Changes from Stanley Services for May 2011: As from the opening of business on Monday, 02 May 2011 the Price of Diesel will increase by 0.10p to 72 Pence per litre, the price of Kero will increase by 0.05 pence to .73 pence per litre, the price of petrol will increase by 0.03p to 94 pence per litre. Propane gas will increase to £25.48 for an 11kg cylinder and to £98.90 for a 45kg cylinder.
After a few months of gradual increases of approximately 0.02p the price exploded with an 0.10p increase. What has caused this?
Fuel bought at a low price is topped up with heating fuel that costs more. This brings the total value of what is in the tank higher. The last lot of top-up heating fuel was significantly more expensive and added 10p to Diesel prices and 0.05p to Kero supplies.
Factors that increase prices include the risk of getting supplies, refinery capacity, supplies on hand, rate of production and demand.
International tension brings risk to extraction of hydrocarbons from affected countries. At the moment with popular uprisings in Libya, contested elections in Nigeria and tensions in Iraq, Iran and other oil producing countries, it is more dangerous to extract supplies.
With ageing infrastructure in the US it is more difficult to produce and store distillates. A good rate is 94 to 96% but a rate of 79.8% in February this year means that less distillate is available for sale, thus raising the price. Some refineries have to shut down due to failure and this also decreases supplies available for sale.
Demand is a key component of price rises; and in the winter we require more supplies than in summer months. Naturally, Stanley Services will pay more to keep people supplied during cold weather. They are a business and must pass their increases to customers.
Prices can rise too high and then people skimp rather than buy fuel at higher prices. Skimp No. 1 is our wind farm, which has knocked several pence off the price of electricity per unit. This means less fuel is consumed. Skimp 2 means that people buy insulation and appropriately fitting windows for their homes, thus reducing fuel consumption. Skimp 3 entails keeping homes and offices cooler during winter months. Also, people have stocked up on fuel prior to winter months when prices naturally go up.
It is expensive to store highly priced fuel so at some stage the price of that fuel must come down in order to shift it, replacing it with lower priced fuel, which is more in demand.
At the moment the price per barrel of crude has come down due to the death of Osama Bin Laden and more favourable dollar/pound rates. FINN is keeping an eye on prices and rates and hopes this lowering of both is more than just a blip in the screen.
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