One week after the Cayman Compass reported that Cayman Islands fuel prices remained stubbornly high, bucking a worldwide trend since the summer, prices at the pump have declined by an average of 13 cents per gallon.
According to data maintained by the Cayman Islands Petroleum Inspectorate, the average price of self-serve regular unleaded at Esso (now owned by Sol) and Rubis stations was $5.46 as of Nov. 13. On Oct. 24, the average price per gallon was $5.59, according to the inspectorate’s data.
For the Grand Cayman stations that sell only full-serve gasoline, prices also dropped for the most part. At Mostyn’s Esso in Bodden Town, full serve prices for unleaded regular gas went from $5.66 per gallon on Oct. 24 to $5.51 per gallon on Nov. 13. At Lorna’s Rubis station, full serve prices went from $5.65 per gallon in October to $5.50 per gallon in November. The North Side Esso station dropped its prices about eight cents per gallon during the period, while prices at the East End Rubis station stayed the same, according to inspectorate data.
On Nov. 7, the Compass reported that prices at U.S. gas stations had declined about 51 cents since August, while prices at Cayman stations during the same period dropped an average of three cents per gallon of regular unleaded.
A number of service station owners maintained at the time of the Nov. 7 article that they were unable to lower prices at the pump because they were still being charged the August wholesale rates by petroleum distributors Esso and Sol.
In response, Sol Petroleum’s Cayman Islands representative Alan Neesome said the company felt it was unfair to compare U.S. fuel prices to those in Cayman.
“The USA is a macro market with totally different supply logistics, vast fuel resources, huge fuel storage capacity, a network of pipelines from the refineries to the distribution points, and trucking fleets which deliver fuel 24 hours per day, 365 days per year,” Mr. Neesome said. “The USA’s scale of operations provide efficiencies in fuel distribution that Cayman does not obtain as we have much higher unit infrastructural and operational costs which result in higher prices to consumers than in the U.S.”
Mr. Neesome said Sol Petroleum usually receives fuel shipments about every four weeks, and that cargo received may have loaded on the supply ship several weeks before arriving in Cayman. This delay in shipping creates a lag in pricing compared with current international prices, he said.
“In addition, to ensure security of supplies during hurricane season, we keep fuel inventories at higher levels; with August, September and October typically being the slowest months of the year for fuel sales, it takes longer to consume fuel inventory, which causes additional pricing lag,” Mr. Neesome said.
He added, “[On Nov. 5] Sol reduced its wholesale pricing to customers by 15 cents per gallon for gasoline and 10 cents per gallon for ultra low sulfur diesel, and these price reductions are already being reflected at the pump as the dealerships use up their service station inventories.”
That drop may account for the Nov. 13 reported price drop at the Sol/Esso gas stations, Mr. Neesome said.
Representatives of Rubis in Cayman did not respond to Compass questions by press time Tuesday.
Planning Minister Kurt Tibbetts said earlier in the year that a proposal being considered by government, in which south Texas-based Navasota Energy would act as a consultant or adviser to government on the development of a new bulk fuel storage facility, might assist in a long-term lowering of local fuel prices, including those charged to Caribbean Utilities Company customers. A memorandum of understanding signed in April between Cayman and Navasota indicated that facility could be built in the eastern districts of Grand Cayman.
“The Cayman Islands location has geographical advantages for the supply of fuel to various other Caribbean jurisdictions,” Mr. Tibbetts said.
The proposal would consider an onshore bulk storage facility that could initially fill fuel tankers heading to the central and eastern Caribbean Sea. However, that might not be the only use for such a facility, and Mr. Tibbetts said in the long term it could eventually be used to replace the current bulk fuel terminal in George Town.
“If something like this becomes feasible, it is very likely that Caribbean Utilities Company and other local entities could get their fuel much cheaper than they’re getting it now,” he said. “It could also be a means by which more competition is brought to bear in the retail fuel sector, but all of these things are what we are going to be examining.”
The current fuel storage station at Jackson Point was identified as a potential health and safety hazard, not because of its location in what has become a fairly dense residential area, but because its large volume fuel lines run directly under several George Town neighborhoods, including Windsor Park.
“That’s certainly what we would avoid in the future … a proper tank farm could well cause the ones in South Sound to become obsolete,” Mr. Tibbetts said. “It is certainly worth looking at.”