Prices at the pumps have been steadily rising this year to their highest in the Cayman Islands, in line with global trends.
As of Monday, 7 April, consumers were paying as much as CI$4.75 per imperial gallon for gas and up to $4.73 per imperial gallon for diesel in Grand Cayman. An imperial gallon is 1.2 US liquid gallons.
High demand for diesel globally has been pushing its price to record levels.
Esso Standard Oil Ltd had three increases for wholesale gasoline prices and four increases for diesel in 2008 so far. Their latest wholesale increase for both gas and diesel was Friday, 4 April.
So far this year gasoline prices at the pumps at Esso service stations have gone up by as much as 40 cents a gallon and diesel by about 60 cents a gallon.
‘This is consistent with Esso’s wholesale price increases,’ said Country manager with Esso Standard Oil Ltd. Alan Neesome.
Both fuel companies that supply the Cayman Islands, Esso and Chevron (Texaco) set wholesale prices, with the individual gas station dealers then free to set their own prices at the pumps.
‘Consistent with the international situation, where the world is experiencing the highest prices ever, from the records I have, they [Esso wholesale prices in Cayman] appear to be the highest by about 10 cents a gallon for gasoline when compared to the previous high in mid year 2006,’ said Mr. Neesome.
Retail District Manager with Chevron (Texaco) Caribbean Inc., Armando Vegas said he could not say if the wholesale prices for Texaco were the highest they have ever been in Cayman as they would have to be adjusted by factors such as inflation and currency devaluation.
Chevron (Texaco) has increased wholesale prices to the dealers five times this year already, but Mr. Vegas declined to state by how much.
‘Prices in the international market have gone up sharply since January,’ he said.
A survey of some of the prices around Grand Cayman on Monday showed prices to be as high as $4.75 (4 Winds Esso) for premium full serve gas down to $4.32 (Maedac House Texaco) for regular self serve gas.
Diesel was hovering between $4.73 (4 Winds Esso) and $4.30 (Savannah Star Mart) per (imperial) gallon.
In May last year, full serve gas was between 17 and 50 cents per gallon less than it is now and diesel was between 40 and 80 cents per gallon less than now.
Mr. Neesome pointed out that to draw any conclusions from a snapshot in time is difficult because international fuel prices fluctuate constantly in the world markets as there are a lot of factors that can affect them.
‘In addition, local timing of supply tankers and local competitive market pressures have actually benefited Cayman. As prices on the international market have been very volatile, prices in Cayman, although increasing in line with world trends, the increase on the whole has been slower.’
Mr. Vegas outlined some of the main causes for the rising fuel prices.
‘Of course the main contributor is the increase in oil prices to record levels above $100 per barrel, which accounts for a significant portion of the cost of fuel.
‘Oil prices are driven by fundamental factors like rising world demand, tight supply, depreciation of the value of the $US, geopolitical instability in some producing countries.’
He also noted that there are a number of actions that can be taken to conserve fuel.
‘From making sure the vehicle is tuned up, to checking tires to ensure they are properly inflated, car pooling, etc. Consumers are more and more taking the fuel efficiency factor into consideration when purchasing their next car, which can also make an important difference.’
Mr. Neesome added, ‘Drive sensibly, don’t aggressively accelerate or brake. Anticipate the driving situation to avoid heavy breaking.’
Although Mr. Vegas said it is hard to predict, he noted that in the short term, we are likely to continue to see high prices, based on the fundamental factors affecting rising fuel prices.
Mr. Neesome, however, said the outlook is difficult to determine and future prices cannot be predicted.
‘Oil companies do not set the price of crude oil. It is bought and sold in international markets, and the price reflects the current market conditions and outlook among other things. In the case of Esso Cayman Islands’ company, ExxonMobil, the corporation only produces three per cent of the world’s oil, therefore our company has no influence in final crude oil prices.’
He added that the Cayman Islands and the Caribbean are very small players with very little influence on global fuel economic factors. ‘The Caribbean region represents less than one per cent of global demand. Therefore Cayman and the Caribbean are exposed to international fuel price variations with very limited influence on prices.
‘What Esso Cayman is doing is just to be as efficient as possible in order to keep costs as low as possible. Our international fuel suppliers are sourcing their products from the most convenient points of supply in terms of quality price and reliability.’
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