The establishment of government-mandated price controls for petroleum could end with Cayman Islands residents paying more to fill up their cars and air condition their homes, representatives of a local oil company said Monday.
“In a regulated market, the regulator [government] must guarantee a reasonable return to the regulated industry,” said Alan Neesome of Sol Petroleum, after being asked about regulatory issues on Monday. “Sol shares the government’s objective of making fuels available at competitive prices, and the current free market in Grand Cayman is undoubtedly accomplishing this objective.
“Pump pricing here overall [has] decreased substantially, in line with international pricing, whereas prices in other jurisdictions in our region, especially those with regulations, are in many cases higher when compared to the equivalent price per imperial gallon for the same product.”
Progressives-led administration ministers and opposition party members have played up the potential for government to order greater regulatory control of the territory’s two main petroleum suppliers, Sol and Rubis, and of the local retail gas stations. The heightened discussion came about after it was revealed in late October that local fuel prices had not fallen in more than four months, despite a precipitous drop in U.S. and European consumer prices during the same time.
Since November, Grand Cayman fuel prices have fallen at a steady pace, with a significant reduction last weekend. The average price for regular unleaded gasoline dropped from $5.59 in October to about $4.60 currently.
At several Rubis-supplied stations in Savannah and the eastern and southern sections of George Town, the price of regular unleaded dropped from $4.79 per gallon to $4.37 per gallon between Friday and Saturday, a 42 cent decline from Jan. 5. The price reduction for regular unleaded gasoline at Sol-Esso stations was less, but still significant. Most Esso stations’ per gallon prices declined between 20 cents and 25 cents as of Saturday, compared to the price on Jan. 5.
Mr. Neesome said Sol-Esso stations should have started seeing a further price drop on Monday or Tuesday after cheaper shipments of fuel arrived here.
“The infrastructure that Sol has in place to receive ship cargoes and store the product … also means that there is some delay in price changes until the current stock in storage is exhausted,” he said. “The timing of any price change will be mostly dependent on the price and quantity of the product imported and the timing of the vessel coupled with local fuel consumption on the island.”
Opposition Leader McKeeva Bush said last week that he is tired of hearing that from the oil companies.
“Each and every citizen is very curious as to why our gasoline/fuel prices consistently move upward within weeks of any global price increase, but never can follow a downward trend on global fuel,” Mr. Bush said.
Mr. Bush filed a private members motion in the Legislative Assembly last week asking government to consider more specific reporting requirements for the islands’ two major fuel distributors on the “actual costs” of shipments to the territory. Mr. Bush said he believes even $4 per gallon of regular, unleaded gasoline would be too high.
The lowest observed retail price on Grand Cayman as of Tuesday was $4.37 per gallon of regular unleaded gasoline.
Mr. Neesome said, “No one can accurately predict international fuel pricing, there are too many factors involved.”
Whether government will accept Mr. Bush’s proposal is yet to be seen. Planning Minister Kurt Tibbetts, who has responsibility for fuel regulation in the territory, has said he believes the local oil companies “have a lot more room” to reduce prices, but he also understands the “lag” in price reductions that sometimes occurs because of the timing of shipments.
Various U.S. trade publications indicated over the past week that retail prices there may be hitting their lowest level, with North American refineries cutting production due to an oversupply since last summer.
However, daily statistics maintained by the American Automobile Association have not shown any evidence of pump prices increasing. U.S. national average fuel prices for regular unleaded gasoline were US$2.05 on Tuesday, down a half-cent from the day before and down 6 cents from a week ago Tuesday. The U.S. national average price has fallen by more than US$1.60 per gallon since June 2014.