Utility regulator OfReg’s weekly fuel price survey shows that the price of regular fuel has dropped below $4 per imperial gallon, following a sharp fall in crude oil prices since the end of February.
OfReg expects a further price drop within the next week, the regulator said in a press release.
The price for a barrel of West Texas Intermediate crude oil has declined from US$63 at the beginning of 2020 to less than $17 this week.
In parts of the US, this drop could lead to lower gas prices within four to five days.
However, it takes between four to six weeks for newly purchased fuel to reach the Cayman Islands. This is partly due to import logistics, OfReg said, as oil tankers deliver fuel to a number of other ports before arriving in Cayman. This means bulk fuel arriving on island on 20 April was purchased and loaded on a vessel around mid-March.
In addition, the local inventory must be depleted before fuel bought wholesale at lower prices reaches the consumer. The currently reduced local demand for fuel amid lockdown measures has led to a further delay before the full effect of lower oil costs can be seen in the form of cheaper gas prices at the pumps on island.
“The reduction in demand for fuel locally means fuel in bulk tanks and at the gas station will take a longer time to sell out, hence consumers may not see prices reducing as fast as when consumption is normal,” OfReg said.
Currently, the lowest local gas price is $2.99 per gallon for ethanol blended regular gasoline E10. The lowest per-gallon price for regular is $3.87 and for premium, $4.43.
The utility regulator said the cost of imported gasoline and diesel has fallen by an average of $0.90 for those products this year.
This leaves some room for a further decline in gas prices.
Since the beginning of the year, the price of regular has fallen by $0.65, premium is down $0.51 and diesel has declined by $0.43.
OfReg said it is focussed on ensuring that the reduction in prices from the importers passed through to the gas stations are reflected at the pump.
The office tracks and assesses the various elements of retail gas prices, including cost of crude, insurance, freight and transport, as well as the margins for traders, wholesalers and retailers.
Based upon the reduction of fuel prices in the US, OfReg said it will be assessing the purchase price and comparing it with the sale price when the next shipment arrives in Cayman.