Gasoline prices continued to rise in the United States this week, despite the price of crude oil falling and its inventory rising.
The seemingly conflicting signals make predicting gasoline prices in the Cayman Islands difficult. Prices here shot to just under $6 per gallon last week and some have predicted $7 per gallon by summer.
On one hand, the price of fuel here could possibly come down a little. Chief Petroleum Inspector Gary McTaggart said some experts think prices in the United States may have peaked and the market could contract. Conversely, the North American summer is approaching, a time when automobile travel historically increases and the higher demand for gasoline increases the price.
Mr. McTaggart warned, however, that it was early to speculate on the issue of future prices. He noted that gasoline prices tend to rise in the summer, not only because of more travel, but also because of scheduled maintenance at refineries during the same period.
Esso Country Manager Alan Neesome didn’t have a good feel for what prices will do either.
“I simply don’t know,” he said. “….Crude oil prices can be affected by currency exchange rates and geopolitical risks and tensions. There is no trend necessarily to show higher or lower prices in the summer months.
Mr. Neesome said the price depends on which factors are dominant at the time of pricing.
“There could be reduced inventories because of the increased consumption in the USA, due to the summer driving season,” he said. “But then again, higher fuel pump prices tend to make consumers conserve and reduce travel, therefore consumption does not increase as much, and international inventories increase, in which case prices tend to stabilise.”
Mr. Neesome also pointed out reasons for what many say are absurd prices at the pump.
“International oil sales are typically made in US dollars,” he said. “As oil prices in the world have been rising, the continuing weakening US dollar relative to some other stronger currencies have meant the oil price increases are being felt more in the US and countries with currencies fixed to the US dollar, such as Cayman.”
Mr. Neesome said consumption of diesel fuel in Cayman has been known to almost double traditionally during the summer months as CUC, the Islands’ largest consumer of fuel, requires more to meet electrical demand for increased air conditioning use.
“This means cargoes of diesel increase in both frequency and volume,” he said. “We have to balance CUC’s actual demand with available space on the ships for other products such as gasoline and jet fuel to ensure we maintain adequate supplies of all fuels, thus ensuring security of fuel supplies for airlines and the general public.
He added that the frequency of ships off-loading in Cayman depend on Esso inventory on Island, the fuel demand forecast, actual demand, ship capacity and ship availability. Some months get one ship and others perhaps two or three, Mr. Neesome said.
On average, gas arrives in the Cayman Islands every 17-21 days. Sometimes, due to weather, changes in vessel schedules caused by maintenance, or delays at other ports, ships can arrive closer together, affecting price. Chevron and Home Gas schedule their delivery of fuel separately from Esso’s based on their own supply and demand factors. Deputy Petroleum Inspector Des Ebanks said Cayman was “on the end of the food chain.”
I doubt we have peaked yet and as many refineries are doing maintenance and changing brands of fuel in the coming summer months, this will affect the price also, if only by several cents.”