Pump prices spike, electricity costs next

Written by  //  February 27, 2011  //  Economy  //  No comments

The increasing price gasoline is already affecting consumer
pockets.  (Credit: © Mauricio Pascual)

As oil prices settled at close to $98 a barrel Friday, prices at the pump on the island also spiked, prompting concerned consumers to scramble to fill up their tanks in case things get worse in coming days.

An informal tour of metropolitan area gas stations on Saturday showed prices hovering at about .83 cents per liter, and long lines of vehicles snaking out of the few stations where regular unleaded gasoline sold the cheapest.
Although Friday’s oil prices were down slightly from a high of $103 a barrel on Thursday, it was still 13 percent over the same day a week ago. Prices have been creeping up in response to concerns over the possibility that the turmoil in Libya — Africa’s largest oil producer — could spread throughout North Africa and the Middle East, affecting output.
The hike in oil prices also set off an alarm among local independent gasoline retailers, who late last week threatened to shut down their stations to pressure the Consumer Affairs Department to review profit margins to offset what they pay for the liquid.
On Friday, Luis Rivera Marín, head of the consumer watchdog agency known as Daco, expressed opposition to modifying profit margins for gasoline retailers, as doing so would “deal a direct blow to consumer pockets.”
Widening profit margins would represent a price increase at the pump, something that is already evident.
“Wanting to put pressure to get profit margins changed by threatening to close gasoline stations for a day on March 8 is an illegal action, because Law 228 prohibits such an action and Daco has the authority to take over the product and the establishment, as gasoline is a basic necessity,” Rivera Marín warned.
Sen. Lornna Soto, who chairs the Senate Consumer Affairs Committee, has called gasoline retailers to a meeting at the Capitol on Monday to address their concerns. Daco representatives, along with the heads of the Puerto Rico Gasoline Retailers Association and the Puerto Rico Banks Association, have been invited to attend.
“The legislative assembly is worried about the claims made by island gasoline retailers, and the last thing we want is for those businesses to close and for consumers to be affected,” she said. “For that reason, I am calling this meeting and I’m sure we’ll clear up concerns and find an alternative to this problem.”
PREPA warns consumers electricity bills will increase
On Saturday, Miguel Cordero, executive director of the Puerto Rico Electric Power Authority said the crisis in the Middle East will lead to an increase in the fuel adjustment charge reflected in consumer bills, probably as early as next month.
Prepa Executive Director Miguel Cordero
(Credit: © Mauricio Pascual)
“For every dollar that the price of petroleum increases, it shows more or less the same way on the bill and that will affect us greatly,” said Cordero. “Although we’ve managed to improve system efficiencies and we’re consuming less liquid fuel, there is nothing that can help us other than ending the use of petroleum.”
In a statement, Cordero reaffirmed the corporation’s need to steer away from petroleum dependency and increase the use of natural gas to produce energy. Saying the agency has to “immediately begin implementing a program to diversify fuels,” Cordero again lobbied for the administration’s Vía Verde natural pipeline project.
Next week, PREPA will submit additional information to the U.S. Environmental Protection Agency regarding Vía Verde, a $500 million project that would transport natural gas from Puerto Rico’s southern coast to the north in an effort to supply the island with cleaner, less expensive energy.
The project has received opposition from environmental and other concerned groups who claim building the pipeline will negatively affect forests, waterways and farmlands located along the route.

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