Will Belizeans Enjoy Declining Oil Prices at the Fuel Pump?

Turning to a related issue…oil. It is no secret that on the world market, the price of oil has gone down considerably. But consumers in Belize are yet to feel a relief as prices for fuel remain upwards. Since fuel drives everything, it means that there is less to spend on other things. So what is keeping the prices steep? News Five’s Isani Cayetano looks at the world prices vis-a-vis the local costs.

Isani Cayetano, Reporting

A dramatic fall in the prices of oil and fuel is being recorded across the global market.  The plummet in the cost of brent crude is directly attributed to a reduction in demand for petroleum products.  At eighty dollars per barrel, the world is presently thick with oil.  That oversupply is being offset by a lack of need, forcing prices at the pump elsewhere to go down considerably.  In Belize, however, the acquisition of oil and fuel from Petrocaribe is based on a three-month cycle.  Petrocaribe is an oil alliance of many Caribbean countries with Venezuela on conditions of preferential payment.  The payment system allows for the procurement of oil on market value for five percent to fifty percent upfront with a grace period of one to two years; the remainder can be paid through a seventeen to twenty-five year financing agreement with one percent interest if oil prices soar beyond forty US dollars per barrel.

Depending on when prices reduce on the international market, there is no guarantee that the effect would be felt locally since oftentimes tankers are already en route to the country.  To give an example, if a freighter is being filled with oil and fuel prior to an adjustment in prices, the process can either be expedited or protracted to benefit the supplier accordingly.  Notwithstanding those changes, government, as the regulator, can also compensate for the cost of acquisition by driving up taxes such that consumers wouldn’t be affected at the pump either way.

That’s here at home.  With oil remaining around eighty to eighty-five dollars per barrel, down nearly thirty percent from a peak of over a hundred and fifteen dollars in mid-June, expert study of the cause and effect of the price drop has been extensive.  Among the more frequent reasons for the existing glut of oil is the Saudi Arabian need to maintain its market share in Asia amid rising production worldwide.  That determination has seen them preparing to accept oil prices as low as eighty dollars for as long as two years.  Belize, on the other hand, is yet to see a reduction in the cost per gallon of fuel at the pump.  Presently, a gallon of regular is upwards of eleven dollars, while diesel and premium are both north of thirteen dollars.

In the matrix of declining prices nonetheless, is the profitability of Belize Natural Energy Ltd. which also sells crude to the world market.  BNE has been reporting a steady decrease in production as its wells begin to dry up.  How the overall plunge will affect the company remains to be determined.  In spite of the global picture and savings at the pump, Belizean consumers are yet to benefit from reduced prices. Reporting for News Five, I am Isani Cayetano.