Oil giant takes another round of fuel price hike

Northern Marianas motorists and car owners have been faced with higher fuel costs after oil giant Shell Marianas raised pump prices of its petroleum products by an average of six cents per gallon during the weekend.

There was no word yet from market leader Mobil Oil Marianas if it would increase prices of its fuel products to the current level sold at Shell service stations throughout the islands.

Shell North Pacific president Andrew Harford attribute the recent round of fuel price hike to the increasing cost of petroleum products in the Singapore regional market primarily spurred by strong market demand.

“We’ve been driven by prices in the Singapore regional market which continue to rise and, unfortunately, we’ve reached the point wherein we can’t absorb any further costs,” Mr. Harford said in a telephone interview from Guam.

He added that Shell has been closely monitoring developments in the global industry for any possible adjustment should there be changes on how petroleum products are priced in the international market.

“We continue to keep an eye on this issue. I can’t predict what’s going to happen next but we are definitely monitoring the market. At this point in time, there is a strong demand and this is what’s keeping the prices up,” he explained.

Petroleum products are currently sold at Shell service stations on Saipan at $2.18 per gallon for regular gasoline and $2.27 per gallon for premium gas.

On the other hand, pump price of regular unleaded gas at all Mobil service stations is $2.12 per gallon and $2.21 per gallon for premium gasoline. Diesel is sold at $2.05 per gallon.

According to Mr. Harford, the discrepancy between the pump prices of petroleum products between Guam and Saipan is basically caused by the absence of self-serve stations in the Northern Marianas.

“We offer full-service in all of our stations on Saipan unlike on Guam where we have the self-serve operation,” he said, adding that fuel prices on other parts of Micronesia are a little bit higher than in the Marianas due to logistics difference.

Mr. Harford pointed out that there is a varying cost of transporting, storing and handling petroleum products between each island in Micronesia which spells the difference on pump prices of fuel in the Marianas and in the other parts of the region.

He said the company, in previous months, has tried to exercise a status quo in the prices of its petroleum products despite the increase in the international market.

Costs have, however, continued to rise as OPEC participants continue to stay within their production quotas and seasonal and regional demands make their impact felt. Costs of petroleum products in the regional market in Singapore shot up by more than 30 cents per gallon since Jan. 1, 1999.

Oil firms have focused heavily on initiatives to reduce expenses over the past year and improve operational efficiency without any compromises to safety. This has helped tremendously to offset negative effect of rising product cost.

The fourth since February this year, oil giants Mobil Oil Mariana Islands and Shell Marianas have recently increased fuel prices, citing trends in both global and regional markets.

Economists are concerned that although increasing prices of petroleum products remain confined in gas pumps, airline tickets and transportation costs, their effects will soon translate to further contraction of the CNMI economy in terms of higher commodity prices.

If oil prices stay high for months, the impact could grow as consumers pay more for basic commodities. Local wholesale businesses and distributors have started coughing up higher budget for the forwarding of the imported items from the point of origin to Saipan ports, and from the harbor to the warehouse.