ceis petroleum update june 2011
DESCRIPTION
CARIBBEAN PETROLEUM UPDATE is a monthly Bulletin which highlights petroleum issues affecting or relevant to the Caribbean, international developments that may affect the region’s way of life and movements in oil prices and retail prices for fuel regionally.TRANSCRIPT
CARIBBEAN PETROLEUM UPDATE is a monthly Bulletin which highlights
petroleum issues affecting or relevant to the Caribbean, international developments that may affect the region’s way of life and movements in oil prices and retail prices for fuel regionally.
CONTACT US Caribbean Energy Information System
Scientific Research Council Hope Gardens, Kingston 6, Jamaica
1-876-927-1779 (Telephone)
1-876-977-1840 (Fax)
[email protected] www.ceis-caribenergy.org
continued on page 2/
Caribbean Energy Information System (CEIS)
June 2011
When increases in international crude oil prices occur, the impor-
tant question that comes to mind is how these increases will be
“passed through.” From a consumer perspective the consumer
becomes concerned with the impact of such increases on retail
prices of refined fuels such as gasoline, diesel, kerosene and LPG.
From a Government perspective particularly in countries where
government regulates the petroleum sector, explicit/timely decisions
have to be taken as it relates to the degree of passed through of
world oil prices to the domestic prices. Similarly in countries where
retail prices are market driven, pressures are placed on governments
to adjust policies or taxes to cushion the effects of higher world
prices on the consumer. In such instances, effects on government
revenues, income of other players such as distributors, impact on
consumers, effects on income distribution and inflation and their
effects on resource allocation are brought to beer. A lack of pass
through reduces incentives to economize on fuel use and increases
fiscal risks through unachieved subsidies or revenues. The pass
through rate of world oil prices is based on a Country’s retail pric-
ing regime.
Pricing Regimes
Most Caribbean countries utilize a market pass through pricing
regime whereby countries adjust retail prices with every shipment
Source: http://www.usea.org
The International Crude Oil Pricing Method has been Changing together with the development of
Oil Market Structure.
page 2 Call: 1-876-927-1779 | Caribbean Petroleum Update : June 2011
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
SYNOPSES OF THE PETROLEUM PRICING SYSTEMS
USED IN THE CARIBBEAN continued from page 1/
of petroleum products. The same basic structure is used in all of
the OECS countries and Trinidad & Tobago for calculating the
retail prices of products such as Gasoline, Kerosene and Diesel.
The reference price of petroleum imports used in these countries
is based on the Mean Caribbean Postings system (quotations
by oil companies). This system was established in the 1950s.
However, this system does not reflect competitive international
spot market prices. A simplified version of the retail petroleum
price calculation/structure used in these countries is as follows:
Calculation base:
In Jamaica, instead of the Mean Caribbean Postings, the US
Gulf Reference Pricing System is used as the base for calculat-
ing domestic retail prices. This price forms part of a complex
automatic formula used by the Petrojam refinery which allows
for full pass through of any increases in the Gulf Reference
prices to the retail prices. However, the adjustment process
allows for one month smoothing policy which means there is no
one to one increase in prices within the month.
In comparison to the pricing structure used in the OECS coun-
tries, the Jamaican pricing structure includes an Ad Valorem
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Tax (10%) which increases as Gulf reference prices increases
thereby leading to a larger absolute increase in domestic retail and
wholesale prices for refined products. Additionally, refinery over-
heads are factored into the retail prices then the relevant taxes are
applied to derive an ex-refinery price.
Jamaica operates in a deregulated market environment which
means that final retail prices are determined by the marketing
companies who uses the ex-refinery prices provided by Petrojam
as their base. In Guyana a similar deregulated environment exist
whereby marketing companies determine the final retail prices.
However, through the state owned Oil Company Guyoil, govern-
ment tries to cushion the impact of international oil prices
increases on the consumers by using the prices set by Guyoil as the
benchmark for the other marketing companies - Guyoil prices are
usually lower. Guyoil uses both the US Gulf Reference Prices and
the Mean Caribbean Postings as benchmarks for setting prices.
Countries such as Suriname and Belize have regulated environ-
ments hence government fix taxes and determine when prices are
changed. In Belize a “next in first out approach” is used to estab-
lish new prices. This simply means that with each shipment of fuel
the prices are recalculated (by Esso, the major importer of fuel)
and passed on to the government who then determines or indicates
when the change in prices becomes effective.
Although the pricing mechanism/structures used in the Caribbean
countries have slight variances, retail prices in all countries are
impacted by changes in world international crude oil prices. These
changes, in some way or the other impacts the revenue base for
government, distributors/suppliers and most importantly the
spending power of the small consumer. Outlined below are indica-
tions of the taxes and the margins as percentages of retail pump
prices for Regular Unleaded Gasoline and Diesel in selected
Caribbean countries
FOB Value of Imports +
Freight & Insurance =
C.I.F Value of Imports +
General Consumption Tax +
Customs Service Charge +
Petrol Levy
]
]
]=
]
]
Landed Cost +
Wholesale
Margin +
Retail Margin
]
]
]=Retail Price
]
]
COUNTRY Diesel
Regular
Unleaded
Gasoline Diesel
Regular
Unleaded
Gasoline
BAHAMAS 25 23 15.4 13.7
BARBADOS 19 25 10.9 12.6
BELIZE 25 28 12.3 9.8
DOMINICA 17 21 6.1 6.6
GRENADA 23 24 11.7 13.4
GUYANA 12 15 8.5 6.3
JAMAICA (E-10) 22 22 12.6 12.5
MONTSERRAT 12 13 11.9 11.4
ST.LUCIA 23 23 10.4 12.1
ST.VINCENT 11 17 10.4 10.3
SURINAME 32 32 7.3 7.4
TRINIDAD/TOBAGO 30 55 13.0 8.5
Note: Jamaica - Margins are inclusive of haulage/transport cost.
Taxes % of
Retail Price
Margins % of
Retail Price
Caribbean Petroleum Update : June 2011 | Call: 1-876-927-1779 page 3
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
REGULAR UNLEADED GASOLINE AVERAGE PRICES AT THE PUMP
January - June 2011 In June 2011, upward movements in the retail prices for regular unleaded gasoline was seen in eight of the sixteen countries
reviewed while prices remained relatively stable in five countries with the other three showing declines. These fluctuations
in prices are constantly impacted by the changes in international crude oil prices and the pricing mechanics used in each
country.
.
NOTE:
*US Gallon = 3.785 L
*Imperial Gallon = 4.546 L
*As at November 1, 2009
MTBE was phased out from
all gasoline blends in
Jamaica and replaced with
10% Ethanol.
CHART 1
See prices for other products at See prices for other products at See prices for other products at www.ceiswww.ceiswww.ceis---caribenergy.orgcaribenergy.orgcaribenergy.org ...
Table 1: Unleaded Gasoline: Regular : Average Retail Price January - June (US$/Litre)
2011
COUNTRIES JAN FEB MAR APR MAY JUN AVG
ANTIGUA/ BARBUDA 1.00 1.00 1.07 1.15 1.25 1.33 1.13
BAHAMAS [91 OCT] 1.24 1.25 1.30 1.46 1.47 1.47 1.37
BARBADOS 1.47 1.48 1.49 1.59 1.59 1.59 1.54
BELIZE [87 OCT] 1.33 1.34 1.48 1.50 1.54 1.51 1.45
B.V.I [87 OCT] 1.12 1.13 1.20 1.26 1.26 1.27 1.21
DOMINICA 1.01 1.05 1.06 1.11 1.21 1.24 1.11
GRENADA (95 OCT) 1.05 1.06 1.17 1.23 1.29 1.32 1.19
GUYANA 0.99 0.99 1.06 1.08 1.08 1.12 1.05
JAMAICA - E10 1.17 1.18 1.25 1.28 1.29 1.29 1.24
MONTSERRAT 1.13 1.14 1.18 1.27 1.38 1.42 1.25
ST. KITTS/ NEVIS 1.04 1.07 1.20 1.13 1.14 1.19 1.13
ST. LUCIA 1.14 1.14 1.16 1.22 1.27 1.28 1.20
ST. VINCENT/ GRENADINES 0.99 0.98 1.00 1.06 1.10 1.10 1.04
SURINAME [95 OCT] 1.21 1.32 1.34 1.47 1.55 1.51 1.40
TRINIDAD/ TOBAGO [92 OCT] 0.42 0.42 0.42 0.42 0.42 0.42 0.42
TURKS/ CAICOS 1.36 1.36 1.42 1.42 1.45 1.55 1.45
page 4 Call: 1-876-927-1779 | Caribbean Petroleum Update : June 2011
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
International Crude Oil prices have been on the
decreasing trend over the past three months (April –
June 2011). However, Caribbean countries continue to
grapple with finding the foreign exchange to purchase
the scare resources. Prices seen in June 2011 are still
above the US$100/bbl mark. The highest average
weekly price seen in June for the product was approxi-
mately US$113.5/bbl - seen in the third week of the
month. This represented a 5.2% reduction when
compared to the same period in April 2011 and a
4.8% increase when compared to the same period in
May 2011.
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US$/B
BL
US$/B
BL
95
100
105
110
115
120
125
WK1 WK2 WK3 WK4 Mth Avg
US$
/BBL
Weeks
Average Weekly & Monthly Crude Oil Prices(Apr - Jun 2011)
2011-Apr
2011-May
2011-Jun