Mobil: It’s not just crude prices that govern pump prices

The price of gas at the pump is affected by a combination of factors, so a drop in crude oil prices alone won’t necessarily mean price reduction for Saipan motorists, according to Mobil Oil Mariana Islands Inc.

Saipan motorists have been hoping to see a reduction in pump prices, now that the price of crude oil is in the $80-a-barrel range from about $100 a barrel months ago.

Jaime Andrés Ortega, president and lead country manager for Mobil Oil Guam Inc./Mobil Oil Mariana Islands Inc./Mobil Oil Micronesia Inc., said there is not one single factor that impacts prices at the pump on Saipan, “and trying to draw a link between one factor, such as crude price or inventory stock purchase price, and prices at the pump, would lead to the wrong conclusion.”

“Again, there are many factors that affect the pump prices in Saipan,” he said in response to Saipan Tribune inquiry.

Ortega said that Mobil shares the concerns of people on Saipan about the cost of fuel and its impact on everyday life.

“For this reason, we remain strongly committed to our role: To provide reliable and affordable energy to the community, in a safe and environmentally responsible way,” he said.

Benusto Piteg, of Koblerville, said a portion of the $50 he spends to buy gas every week could have been used to buy food, had Mobil and Shell reduced their prices as a result of a drop in crude oil costs.

“We need relief from paying $4.75 a gallon for regular gas,” the resident said.

Just like many other island residents, Piteg hopes that relief will come soon.

Jeff Boyer, CNMI area manager for IP&E/Shell, earlier said that the CNMI is still using “high-end stocks” but is about to change to “newer products.”

For motorists, this could mean price reduction, although there’s no telling when.

Mobil’s Ortega explained that retail pump prices are affected by a combination of factors, which include internationally traded wholesale prices, operating and capital cost, distribution costs, taxes and duties, currency exchange rates, and market competition.

He also said there are various crude price indices, such as Nymex WTI and Dubai Crude, to name a couple, and the prices can vary between them.

“More importantly, pump prices do not rise or fall at the same time or magnitude as crude prices, for the reason that pump prices are affected by a combination of factors, and crude prices are just one of these many factors. Commodity and product prices, while linked, also have different supply and demand dynamics,” he said.

In Guam and Saipan, for example, pump prices are more directly related to the price of the MOPS (Mean of Platts Singapore) index, which is in turn heavily influenced by regional product demand and supply factors, Ortega said.

Currently, for instance, a major refinery outage in Singapore is placing upward pressure on MOPS, he added.

As to the question of when Saipan or CNMI motorists can see price reduction, Ortega said it is not Mobil’s practice to speculate about where pump prices would go in future “for antitrust reasons.”

Mobil and Shell/IP&E do not issue advance notices of price changes, so many Saipan motorists only learn of price changes by the price displays at gasoline stations.

The last time Mobil and Shell changed their prices was in July, increasing prices by 10 cents a gallon.

Since then, a gallon of regular unleaded gas has been $4.759 a gallon, while super/premium unleaded gasoline is $5.079 a gallon. Diesel is $5.219 a gallon, higher than the current CNMI minimum wage of $5.05 an hour.

Gas prices in the CNMI are among-if not the-highest in the U.S. and its territories.