Opinion: Gas prices

POSTED: 09/17/12 1:35 PM

That there is something funny going on with the price motorists pay at the pump for their unleaded gas is something many people feel but few have been able to pinpoint what is going on.
On August 27 Economic Affairs Minister Romeo Pantophlet announced a price increase of 12 guilder cents per liter. Per August 29 the price went from 2.34 guilders to 2.46 (from $1.307 to $1.374).
At that time the price at Cadisco on the French side was $1.34.
Minister Pantophlet cited the usual blah blah reasons for the higher prices: unrest in the Middle East, and higher prices on the global oil market.
Even if this were true it is not a valid reason for a price increase, because there must be fuel in stock on the island that was bought at lower prices.
We have to keep in mind that, when fuel prices go up, government revenue increases as well. And we all know that our ministries have to cut 100 million guilders from their projected 2013 budgets. Increased revenue will obviously contribute to solve this nasty little problem.
A week later Minister Pantophlet announced a second 12-cent price increase – from 2.46 to 2.58 guilders (from $1.374 to $1.441). At Cadisco on the French side the price remained steady at $1.34. The reasons for the price hike were the same.
We are now on September 17, 13 days after the second price increase went into effect. This weekend the price at Cadisco was still $1.34.
So what happened with the world oil prices during this period? They went up, for sure. On August 1, Brent crude traded for $106.78 per barrel. On August 21 the price had shot up to $116.03, but eight days later (when the first price increase went into effect) it fell by $3.50 to $112.53. On September 4, when the second price increase went into effect Brent traded at $114.98. On Friday the price had gone up again to $116.66.
A little known fact is that Minister Pantophlet signed both decrees to increase fuel prices on the same day: August 21. But instead of hitting motorists in one go with a more than 10 percent price increase, the government opted to do this in two equal steps: 12 cents per Augusts 29, and 12 cents per September 4.
One would think that our neighbors on the French side of the island live in the same world and that they are dealing with the same trends in the global oil market. But no, the gas prices on the French side did not budge.
Between August 1 and August 21 Brent became 9.2 percent more expensive. Yet on that date already, Minister Pantophlet decided to increase prices at the pump by 10.2 percent – even though motorists only learned a week later about the second price increase.
While unleaded gas was cheaper on the Dutch side until the first price increase (by a marginal 2.4 percent), after the second price hike it is suddenly more than 7.5 percent more expensive than at the Cadisco gas stations where motorists pay the euro-price on a 1:1 basis in dollars. Customers daft enough to pay in euros will find out that, due to the strengthening of the European currency, their €1.34 is actually worth a bit more than $1.75 in dollars.
Oh and before we forget – now there is real unrest in the Middle East due to the Innocence of Muslims video. So fasten your seatbelts for the next price increase – or take your business to the French side.

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