Opinion: Fuel prices

POSTED: 06/20/11 12:59 PM

We received a call about the figures GEBE’s Steve Duzanson quoted in yesterday’s front page article. Our reader doubted their accuracy.

Duzanson indicated that two years ago GEBE paid $330 per ton for heavy fuel oil, and that this price has gone up to $760 today. The fuel clause addition to consumer bills followed this price development and jumped from 23 to 56 cents.

Checking these figures with an independent source, we learned the following. The median price for heavy fuel oil in 2009 was $1.49 per gallon. That comes by our own calculation down to roughly $393 per ton (one thousand liters).

The median price during the same period this year is $2.58 per gallon, or roughly $681 (1,225.80 guilders) per ton.

Our reader also doubted a statement by GEBE managing director William Brooks that crude oil prices in 1960 stood at $2.65. The reader said he had never heard of such prices. They were, we learned, not that low, but they were not much higher either. According to Inflation.com, a website that tracks oil prices and adjusts them for inflation, crude oil cost $2.91 per barrel in 1960; adjusted for inflation in 2011 prices that comes down to $22.15.

The fuel clause GEBE is entitled to apply is based on a price of 45 guilders ($25) per ton. For every guilder the price is higher or lower, the company applies a factor of 0.000425 per kilowatt of electricity.

Therefore, based on the current median price, the fuel clause ought to be 50.3 cents per kilowatt. That’s a tad lower than the number Steve Duzanson gave on Thursday, but the principle is clear.

What still has to be explained to consumers however is how in the new tariff structure the cost of fuel will be translated in a charge per kilowatt. That way, consumers will be able to check for themselves whether they are being treated fairly, or that they are being taken for a ride.

 

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