At a glance
• Fuel prices may not have peaked amid Middle East conflict
• Price of gas and diesel at pumps among the highest seen
• URCO said it is continuing to monitor fuel prices
Cayman fuel prices may not have peaked amid Middle East conflict, but potential shortages could pose a greater concern if the fighting drags on.
Prentice Panton, the CEO of Reflections, which operates gas stations in George Town, one near the airport and the other on Eastern Avenue, said that diesel was more than $7 at some service stations, a major increase on the $5 or less charged a year ago.
The cost of regular gas hovered around $6 compared to the sub-$5 to just over $5 charged a year ago.
“It’s the highest I’ve seen it since I have been in the industry – I started five years ago,” Panton said.
“I think the shortages are a bigger concern that the amount of price increases. They can go to the extent they just keep destroying refineries and fields where they are unable to pump … shortages could become a problem.”
Panton added, “Hopefully, we will stay at the same kind of price point; hopefully, there will be a ceasefire.”
But he said he feared the conflict could worsen and that prices could remain high as a result.
He was speaking as the conflict involving a US-Israel coalition against Iran and its proxies in the Persian Gulf continued, with the crucial choke point of the Strait of Hormuz, through which 25% of the world’s oil is transported, remaining a danger zone for shipping.
Panton highlighted that higher fuel costs also meant that the use of tankers to deliver fuel and food to Cayman had become more expensive.
“Food items are being transported and these costs are going up immensely,” he said.
“The potential of food shortages in the next six months, when crops are harvested is a possibility. People need to prepare for that.”
He said that a popular belief that wholesalers and gas stations made more money when prices went up was false, because they needed to find more cash to buy fuel to sell.
Andres Barthel, the Cayman managing director for Rubis’ wholesale arm in Cayman, agreed that retailers and suppliers did not increase their profits in a crisis.
He explained wholesalers needed more working capital to cope with the increased cost as well.
Barthel said, “The money costs us money.”
He also emphasised that independent retailers of fuel set the prices at the pump; not the suppliers.
He added that a tanker was expected this week and that preliminary calculations suggest that there would be no major change in the price of gas and that the price of diesel was likely to go down.
He predicted, “In the two weeks from now, people will see some different pricing at the gas pump.”
But he said that he did not have “a crystal ball” and that prices jumped or fell depending on developments in the conflict.
Barthel added, “There is a concern from the general public and we all hope that the situation changes soon and we go back to more normal prices.
But he highlighted that history had shown it took longer for the supply chain to get back to normal that is did for prices to spike.
He said that Rubis fuel came from the US, but there were alternative sources scattered around the region.
He said Rubis typically held reserves equivalent to about six weeks consumption and he had no concerns about reliability of supply.
He said he had met government ministers in the past week and discussed present conditions in the market.
“I think that government was looking, or probably may have the capacity to look into their duties that they currently charge on fuel and how they probably can help a little bit on that, too,” Barthel said. “If they decide to give relief on duties, that is something that then, of course, will definitely be immediately reflected at the pump prices.”
But he said there had been no direct contact or discussions involving government with Rubis about duty reductions – which amount to 75 cents a gallon on gas and 85 cents on diesel.
“I don’t know if there is already a specific plan or not, all that I know is there have been some discussions,” Barthel said.
Roy McTaggart, the opposition People’s Progressive Movement MP for George Town East, has tabled a private members’ motion asking government to waive import duty of fuels, including vehicle fuel, oil for power firm CUC and cooking gas, for an interim period of three months.
URCO monitoring fuel prices
Sonji Myles, the interim CEO of the Utility Regulation and Competition Office, known as OfReg, said, “We are continuing to monitor fuel prices in light of the situation in the Middle East and, at this point, our position remains unchanged.
“Based on what we are seeing internationally, fuel prices are expected to remain under upward pressure unless there is a material change in global positions.”
He added, “From a supply perspective, we are not aware of any disruption to deliveries into the Cayman Islands at this time. The more immediate issue is cost rather than availability.”
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