Cayman, US gas price differences widen

The gap between U.S. and Cayman Islands retail gasoline prices has grown wider between last summer – when worldwide prices were at their peak – and now, because of a precipitous drop in U.S. retail prices since June.

Cayman’s retail fuel rates have fallen steadily since October 2014, but not at the same rate as seen in the U.S.

In June 2014, the U.S. per gallon unleaded average price was US$3.67 [CI$3.08 using .84 as conversion rate], and the Cayman Islands price per gallon was averaging around CI$5.60 at the time. As of Monday, comparative prices were US$2.19 average [CI$1.84], while Cayman Islands average price was CI$4.89.

The price difference at the pump [shown in CI] at the time retail prices had reached their peak in the U.S. was $2.52 per gallon. The difference now, with the worldwide plummet in oil prices factors in, is $3.06 per gallon.

While acknowledging the accuracy of the figures, Cayman Islands Chief Petroleum Inspector Duke Munroe said it would be “unfair” to use these absolute values “without some consideration of the big picture of prices in Cayman and the U.S.”

“It is reasonable to state that regions in the U.S. where we source our product are at the same starting line essentially in terms of ex-refinery prices (barring negotiations, etc.), but the logistics/supply chain kicks in differently depending on who the buyer is and their respective location, and these are two of the most important factors impacting price,” Mr. Munroe said. “Then the local oil companies have their overheads, marketing and distribution costs (including profits), and the same applies at the retail end.”

There will always be a significant difference between U.S. retail prices and Cayman’s, Mr. Munroe said. The question of the day, however, is “how much higher?”

“[It’s] anybody’s guess, as we do not have objective means to determine this presently,” he said. “[This is] not to convey that Cayman is so very unique in terms of imports, geographic location, infrastructure, market structure, product type, etc. Considering our size, population and key sectors, we do relatively well compared to similar-sized jurisdictions, especially the other overseas territories.

“However, being a relatively higher-cost jurisdiction will make a mark on end prices over and above, especially when compared to the U.S. retail prices.”

In addition, the petroleum inspectorate ran an analysis to try to determine the average lag in price reductions between the U.S. and Cayman, but Mr. Munroe said that coming up with accurate data proved difficult.

“{The] brief analysis [at the beginning of this article], while it may be correct at this point in time, may be erroneous when considering Cayman is probably not at its lowest price as yet. The time lag may be having a more pronounced effect this time around.”

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  1. Whether by design or neglect, the factors stated to be necessary in calculating price comparison between US and CI gas prices, will smoke any calculator. The inspectorate said it was difficult when actually it is impossible.

    It make sense then that some measurable agreed formula be worked out that is acceptable to the inspectorate and the distributors. The variable should be able to fit within some plus or minus margin for error.

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  2. Mr Munroe , while I and many more don’t agree with your analysis on this topic. Why are you and the oil companies sourcing your products at ex refinery prices ? Which are barring negotiations, etc. Why do you use the word depending on who the buyer is and the location? Are you and the oil companies of the Islands going around the world buying gasoline at cheap prices and charging high price in Cayman Islands because of the Islands unique and geographic location. I would think that when 1 ship load of gasoline can be moved at 1 price, which is equivalent to about 20 or more land shipping tankers/trucks , that the price should be slightly higher than US price, not this higher, Cayman is not that big . Someone again not looking after the interest of the people of the Islands again. Government should go back to the oil companies and take bids from several of them and negotiate lower prices.

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