A potential U.S.-led war with Iraq and political unrest in Venezuela are pushing prices at local gasoline pumps upward, forcing motorists to reach deeper into their pockets to fill their vehicles.
In the period from January 2002 to January 2003 the price per gallon of gasoline increased by 40 cents at Texaco service stations, 40 cents at Shell, and 41 cents at Esso, according to Gilles Deal, chief analyst at the Ministry of Trade and Industry.
Diesel prices increased by 40 cents at Texaco; 47 cents at Shell and 41 cents at Esso.
In the past month alone, the price of one gallon of gasoline increased by 9 cents at Texaco, 5 cents at Shell, and 7 cents at Esso service stations.
President of The Bahamas Petroleum Retailer’s Association Garner Dawkinssaid the increases were not totally unexpected.
“This is still the seasonal time for the price increases between January and February which are the colder months in the United States and this part of the world, so this is a regular price increase based on the demand for heating fuel and oil worldwide,” Mr. Dawkins said.
Mr. Deal said the price of petroleum, like any other commodity, is influenced by demand and supply.
He said the reduction in oil supply resulting from a two-month general strike in Venezuela caused a “small” increase in petroleum prices.
“Fuel is on the futures market and [speculative investment] increases the price,” Mr. Deal said. “Once investors speculate there will be a supply shortage and prices will automatically go up.”
Mr. Deal said even more significant increases could result if tension between Iraq and the United States escalates into war.
“Iraq and other Middle East petroleum exporters supply the world with more fuel than any other region, so their region affects oil prices more than anywhere else,” he said.
In addition to the availability of petroleum, a major factor influencing the price of gasoline at the pumps is the pricing mechanism regulated by the government.
The price is calculated by adding delivery cost, government taxes, and supplier and retailer margins to the purchase price at which suppliers purchase fuel from petroleum refineries.
Price variation is caused primarily by increased prices from the refineries, Mr. Deal pointed out.
He said Bahamian petroleum suppliers purchase most of their fuel from refineries in Venezuela and Curacao.
Despite the increased cost of petroleum and the severity of the Venezuelan strike, Mr. Deal said he does not foresee a shortage of fuel supplies for The Bahamas in the immediate future.
The general strike in Venezuela began in December when more than 500,000 protesters took to the streets of Caracas to demand the resignation of President Hugo Chavez.
At its height, the strike reduced Venezuelan oil exports to around one million barrels per day, one third of the pre-strike daily average. Exports have since increased to 1.1 million barrels per day and an additional 200,000 barrels are expected to be exported daily in the coming weeks, staff at the Venezuelan state-owned Petroleos de Venezuela, S.A. said.
By Darrin Culmer, The Bahama Journal
