Oil prices fell below US $100 a barrel more than a month ago, but as last week came to a close pump prices in Grand Cayman were still hovering around $5 a gallon.
On Friday, oil prices had dropped below US $70 dollars a barrel
Leader of Government Business Kurt Tibbetts said Thursday that he expected prices at the pump would be falling soon.
‘The price has been going down consistently now, so we do expect to see changes in short order,’ Mr. Tibbetts said.
Cayman Islands Chief Petroleum Inspector Gary McTaggart has said that petrol is delivered here roughly every three weeks, depending on factors like shipping schedules and the weather.
Because of the shipping time required, there is generally a delay in prices going down in concert with the listed daily price of oil since gas and diesel retailers can’t drop the sale price below what they paid for the oil in the first place.
‘It does take a longer time than one would anticipate to be able to notice the price changes,’ Mr. Tibbetts said.
Mr. Tibbetts said petrol price control regulations had yet to be approved by Cabinet, but were expected to be presented there shortly. Those controls will deal only with the prices set on petrol by wholesalers in Cayman, and will not address regulation of the mark-up applied once that fuel gets to retailers.
However, government is not ruling out further regulations, which could police the mark-ups at gas stations.
The regulations will require gas wholesalers to request changes in price. Under the proposal, Mr. McTaggart would have the ability to refuse those changes or negotiate with the wholesalers for a lower price.
Gas companies have previously said that similar price control efforts by countries around the world have frequently resulted in shortages in oil supplies to those countries, which end up driving up the price at the pump anyway.
Mr. Tibbetts also noted that electricity consumers in Cayman should start to see a drop in the fuel factor portion of their bills. The fuel factor is what Caribbean Utilities Company charges to recover the cost of fuel used in electricity production. When the price of oil rises, it affects what it costs to produce current.
Reductions or increases in fuel factors lag a few months behind because CUC purchases its fuel in bulk amounts. So fuel bought in July, when oil prices had reached US $147 a gallon would actually be applied to bills later in the year.