DUE TO TRENDS IN WORLD MARKET Oil firms monitor world prices of gas

Although world prices of crude oil have already started sliding, the adjustments are not enough to warrant a rollback in local prices of petroleum products but major companies disclosed they are strictly monitoring the trend in the international market.

Major oil retail industry players in the region — Mobil Oil Mariana Islands, Inc. and Shell North Pacific — are not likely to disclose immediate plans but stressed that they remain abreast on the situation in the world market.

Shell North Pacific president Andrew Harford said the oil company is on consistent review of the trends in the regional market but added that the current international situation does not warrant any adjustment on local prices yet.

“The trend in the world market is something that we continue to review although we have not yet reached the stage wherein we are in a position to adjust our prices in our local stations,” Mr. Harford told a telephone interview.

He pointed out that any adjustment in pump prices of petroleum products in Micronesia depend on the trend in the international market and the decisions that will be made by the Organization of Petroleum-Exporting Countries in terms of oil production.

“While there has been reduction in the prices of crude, there are already reports coming out that OPEC members are reducing production to apparently hold the prices up. We really have to be vigilant on the trend in the international market,” Mr. Harford added.

The oil company official raised the possibility of a rollback in local prices of petroleum products provided the current trend in the world market continues and OPEC would decide against proposals to reduce production.

The major factors that dictates the mark-up prices of petroleum products are the supply and demand, he said, adding that the sudden drop of demand for gasoline in the Northern Hemisphere created a bigger supply that resulted in reduction of crude prices.

“The current situation is apparently driven by what is happening in the Northern Hemisphere where people are driving less because of the severe weather condition. With this, the demand for gasoline went down,” he added.

Mr. Harford said it would be very difficult to predict crude price movements. During the period Dec. 1 to 8, the price of Dubai crude averaged $24.03 or $4.32 lower than the November average of $30.32.

Meanwhile, Mobil Oil Marianas said it is still in the process of monitoring trading in the world market, and that future decisions on local prices would have to depend on the international trend.

“Mobil Oil Mariana Islands is closely monitoring the situation and will take the necessary action in due course,” said Cecile Bamba Terlaje, the company’s manager for public relations and government affairs in response to a Saipan Tribune inquiry.

The price of the bell-weather Dubai crude dropped by $4.32 a barrel in December 2000 to about $25 from November’s $30.32 average price.

Local pump prices of refined oil products are pegged on the price movements of Dubai crude.

The price of Dubai crude closed the year at about $25 per barrel, lower than the $28 target of member countries of the Organization of Petroleum Exporting Countries (OPEC) in boosting their daily crude output.