It does not look like gas prices, which have soared to more than $4 at the pumps, will come down any time soon.
”There are no indicators that gas prices will come down,’ said Esso’s Country Manager for Cayman Alan Neesome while declining to speculate on where gas prices are going.
Gas prices in Grand Cayman have soared to more than $4 an imperial gallon at many service stations in Cayman in the past week, some up to $4.14. This represents a spike of more than $1 a gallon in just over a year at many service stations. In early summer 2004 gas prices at many stations in Grand Cayman were around the $3 mark.
From 16 August Esso Ltd.’s wholesale prices have gone up three times: amounting to 35-cents a gallon for gasoline and about 9-cents on diesel.
This is borne out at the pumps where one station has put gas up from $3.74 to $4.10 a gallon and diesel up from $3.37 a gallon to $3.47 a gallon in the past month.
For gas, that represents one third of the price hike of the past year to have happened in just more than a month locally. In August, crude oil soared to US$70 a barrel and Hurricane Katrina also spiked world prices. Crude oil is hovering around the US$65 a barrel mark.
‘Obviously the Gulf affects outside forces, as does speculation. It’s a classic supply and demand situation,’ said Mr. Neesome, adding that when hurricanes are on the horizon there is tension in the market.
Pointing out that spikes in prices from Hurricane Rita are set to come down again, he asserted that supplies that come to Cayman are at the mercy of the world market.
Esso’s Supply sources can vary from Curacao and Trinidad to the Gulf Coast, depending on where the trader has purchased, or on quality and quantity of supply.
However, Esso Ltd. was doing its best not to pass prices on to the consumer, he said.
Describing the markets as very volatile, Mr. Neesome said he could not speculate on gas prices in the future. ‘It’s volatile. There’s nothing more you can say,’ he said.
But Mr. Neesome asserts that gas prices in Cayman are not out of step with prices worldwide. This is because Grand Cayman’s gasoline comes in imperial gallons (1.2 times greater in volume than a US gallon) and other charges to be factored in include: CI duty at 50-cents a gallon per imperial gallon for gas and 60-cents a gallon per imperial gallon for diesel and a further port charge of nearly 5-cents an imperial gallon for importation by sea.
Over the past 20 years the real cost of gasoline to customers has fallen largely attributable to previous lower crude costs as well as manufacturing, distribution and marketing cost efficiencies. Crude oil prices would have to rise above US$90 a barrel to exceed the inflationary peak set in 1981, said Mr. Neesome.
Crude oil accounts for about 50 per cent of the cost of producing gasoline.
Large speculators buying up gasoline to sell at a higher price later are also affecting prices. Other factors have included problems in several US refineries, Saudi threats and the Iran-US confrontation, with gasoline demand in the US still high despite rising prices.
Although Texaco Caribbean Inc. has also recently put up wholesale prices, it was uncertain how much and when, as it had not responded to questions asked by the time of going to press.
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