Council seeks probe of alleged fuel price fixing

The Saipan and Northern Islands Municipal Council has adopted a resolution asking the CNMI Department of Commerce and the Attorney General’s Office to launch an investigation on the series of fuel price adjustments in the CNMI.

Pointing out that oil giants Mobil and Shell have adjusted pump prices of fuel products five times in an eight-month period, the Municipal Council said there is an urgent need to determine if the two companies are engaged in price fixing activities.

The Council stressed fuel price adjustment made by both Shell and Mobil in less than 20 days warrants an immediate investigation by the commerce department and the AGO, alleging that the firms were trying to recover financial losses through the series of oil price hikes.

“Mobil and Shell gas stations shall not continue to penalize the people of the Commonwealth by increasing their gasoline prices to recover loss of profit elsewhere,” the Council said in a resolution adopted Tuesday.

At the same time, the municipal government’s policy-making body pressed the Tenorio Administration to increase its efforts in enticing other oil companies to provide services in the Northern Marianas to allow greater competition.

Council Chair Gregorio V. Deleon Guerrero said greater rivalry is expected to drag prices down since there will be more players who would be competing for the Northern Marianas market. “It will be healthier for the local consumers.”

The latest round of fuel price hike made by Shell and Mobil was in the latter part of September, with both companies blaming the increasing cost of petroleum products in the Singapore regional market primarily spurred by strong demand.

In a previous interview, Shell North Pacific President Andrew Harford said the company 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.

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.

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 for the transportation, storage and handling of 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.

Oil companies have, in recent months, 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 January 1, 1999.