Thursday, July 20, 2017

Gas Prices in Puerto Rico Unlikely to Go Down Anytime Soon

By on May 19, 2016

SAN JUAN– During the last month, consumers have noticed an increase in the price of gasoline, after close to a year of relatively low prices. This fluctuation in price is usually affected by factors beyond the consumer’s control, and are mostly related to international events, experts have said.

However, when it comes down to it, consumers have shown concern about the effect that this recent development is having on their pockets. Carlos Crespo, former president of the Gasoline Retailers Association, talked to Caribbean Business about the gasoline price increase and its effect on the local economy.

<> on October 19, 2015 in Miami, Florida.

(Getty Images)

“Here you have a series of factors that have led to this increase and that have come one after the other,” Crespo said. “For instance, there’s the situation in the Middle East or the fire in Canada, which not that many people have paid attention to. This fire [in Canada] was so large that it covered a piece of land half the size of Puerto Rico and affected oil wells and lines, and brought to a halt the production of one million barrels a day.”

“This is a supply and demand business,” Crespo went on to say. “Demand has increased but the offer has dropped because of these situations, and thus the price has increased. We are seeing prices that we thought we would never see again. Right now, gas went up and we are now talking about $48 to $50 per barrel, when in July of last year it even reached $30. In regards to Puerto Rico, we will be seeing gasoline prices [hover] around 63 to 64 cents, while premium gasoline will cost some 10 cents more and diesel will be at around 55 to 56 cents.”

Crespo said that the tax on gas known in Spanish as the “Crudita” by the García Padilla administration has affected consumers and retailers alike.

“First of all, these two ‘cruditas’ were done to save the situation at the Highways & Transportation Authority [HTA], and to this day no one has been able to prove if this has worked or at least what has been done with that money. It is 8 cents more per liter or 32 cents more being added to the gallon,” he noted.

“Regarding us retailers, it greatly affect us because it requires more investment and the profit margin is less. Thus, our money is being tied up and there are a lot of retailers that are working in the red due to this type of situation.  I hope that we do not see gasoline increase further and that it does or reach 80 or 90 cents per liter, because it will really create a crisis for gas retailers and consumers.”

Crespo predicted that, if prices reach such a level, “nobody will fill up their tanks. Instead, everybody will pour five dollars in the tank, run out of gas more quickly and have to go to the next station. This creates a domino effect that without a doubt will affect consumers, transportation and truckers. You will soon see truckers hinting at stoppages due to the price of diesel, and this could happen because of the effect of the price of gas and the barrel of oil, which is increasing.”

On Wednesday, Gov. Alejandro García Padilla signed an executive order decreeing a state of emergency in the Highways and Transportation Authority, pursuant to the Emergency Moratorium and Financial Rehabilitation Act that was approved recently. In relation to this, Crespo questioned the use given to the “cruditas”.

“I would like for the government in some way to say what happened with the two ‘cruditas.’ How have they helped?,” he asked. “It was taken as a given that with these two ‘cruditas,’ the problems in the HTA would be solve; however, that is no longer the case. Where is that money? What was it used for? Obviously it was not used for the HTA, because their debt is still the same.”

Finally, Crespo said that it is difficult to forecast what will happen regarding gasoline prices, but he was not optimist about it, especially with the beginning of the hurricane season fast approaching.

“If one of those storms goes on into the Gulf (of Mexico) and affects oil production, we already know that the price of oil will increase again. Right now we are at a pretty negative crossroads for the consumer when it comes to the uncertainty of the price of oil,” he noted. “In Puerto Rico, 85% of the economy depends on oil, because here everything is handled through oil. All that we have in Puerto Rico, be it industries, laboratories and the rest, is all related to that.”

 

image_print

You must be logged in to post a comment Login

Start your Free Trial for a limited time!