Car owners face higher oil prices

Northern Marianas motorists and car owners face higher fuel costs beginning Saturday when oil giant Shell Marianas start charging an additional five to six cents per gallon on the pump prices of its petroleum products.

There was no word yet from market leader Mobil Oil Marianas if it would increase prices of its fuel products to the same level as that of Shell’s service stations throughout the islands.

Shell North Pacific President Andrew Harford attribute the recent round of fuel price hike to the increasing cost of petroleum products in the Singapore regional market primarily spurred by strong market demand.

Mr. Harford said that effective midnight of Saturday, Shell’s gas prices for regular and premium will increase by five and six cents respectively due to higher oil prices in the international market.

“With headlines heralding the highest gas prices in many years on the US mainland, international prices have hiked in the last few days forcing this move,” he said in a media statement.

Mr. Harford added that prices in Singapore have risen over 15 cents per gallon in the last two and a half weeks, after briefly showing promising signs of stabilization. He said the islands’ fuel is imported from Singapore “and we have to pay the market price.”

He pointed out that the situation is aggravated by the fact that demand for gasoline increases toward the Spring and Summer seasons, with lower stock levels due to high low prices.

“Competition in the market place has forced us to hold down prices. We cannot continue to absorb these costs, and need to recover some of these latest increases. We will continue to monitor international and local markets as we go, but remain committed to being competitive on the islands,” he stressed.

Mr. Harford said Shell 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.

“We continue to keep an eye on this issue. I can’t predict what’s going to happen next but we are definitely monitoring the market. At this point in time, there is a strong demand and this is what’s keeping the prices up,” he explained.

He said the company, in previous months, has 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 Jan. 1, 1999.

Oil firms have focused heavily on initiatives to reduce expenses over the past year and improve operational efficiency without any compromises to safety. This has helped tremendously to offset negative effect of rising product cost.

Economists are concerned that although increasing prices of petroleum products remain confined in gas pumps, airline tickets and transportation costs, their effects will soon translate to further contraction of the CNMI economy in terms of higher commodity prices.

If oil prices stay high for months, the impact could grow as consumers pay more for basic commodities. Local wholesale businesses and distributors have started coughing up higher budget for the forwarding of the imported items from the point of origin to Saipan ports, and from the harbor to the warehouse.