Published On: Fri, Jun 29th, 2018

Press release: ‘Connection between the world trade price for petroleum and fuel prices in Curaçao’

Gasoline1WILLEMSTAD - The Bureau Telecommunication en Post (hereinafter: the Bureau) regularly hears the question why the regulated fuel tariffs in Curaçao do not immediately follow the development of the world trade price of petroleum. The Bureau, therefore, provides further information on this point with this press release.

First of all, it should be noted that a decrease or an increase in the price of oil does not affect the fuel tariffs one-to-one. The main reasons for this are briefly explained below.

Petroleum prices:

Petroleum is a raw material for making various refined fuel products, such as petrol and diesel. For oil, various price quotations are used on the world market.

The refined fuel products also have their own price which is determined by supply and demand. Supply and demand of, for example, gasoline may at a certain moment be different from the supply and demand of petroleum sold per barrel.

In Curaçao, the quotations of the world trade prices for the refined fuel products, as determined by the Platts, and oil (see WTI quotation on, for example, www.eia.gov) are followed. The Bureau has monitored the oil price adjustments to the refined products from 2008 to December 2014.

Price regulation of fuels in Curaçao:

On 19 January 2011, the Council of Ministers approved the 'Guidelines Fuel regulations' and amended it on 10 August 2011. On the basis of this tariff guideline, the rates of the regulated fuels (Mogas 95, LSD, LPG and fuels for Aqualectra) sold by Curoil on the local market are calculated by the Bureau on a monthly basis.

The starting point of the tariff regulation of fuels in Curaçao is the average purchase price of the fuels purchased by Curoil in a given month increased by margin Curoil, excise duties, sales tax, the dealers' margin and surplus/deficit. When calculating the tariffs, there is always a delay of 2 months as the average purchase price is determined on the basis of purchase invoices from Curoil that are only available afterwards. As a result, there is an administrative delay, which means that any effects of the oil price on the purchase prices of fuels will have a delayed effect in the regulated tariffs.

It should be noted that a comparison of the current fuel tariffs with the tariffs of a few years ago will now lead to an incorrect conclusion, as a number of factors have changed.

Changes in excise duties, increased sales tax and the introduction of surplus/deficit affect the tariffs of the regulated fuels in addition to fluctuations in the purchase prices of the products. As far as the surplus/deficit item is concerned, it is further explained that it consists of a recovery and a correction per quarter. The recovery is intended to compensate Curoil for underfunding costs due to the absence of timely price adjustments during the first half of 2011. With the correction per quarter, forecasts used in the calculation are corrected continuously on the basis of realization figures.

In short, the development of the world trade price for petroleum plays an important role in the development of fuel tariffs, but several factors are relevant. A direct comparison, therefore, does not occur.

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