The tripling of global oil prices during the last decade has been largely passed through to consumers in Puerto Rico’s oil‐intensive economy, causing a domino effect that has trickled down through the main sectors of the economy, Banco Popular’s “Progreso Económico” report concluded.
The result: upward inflationary pressures that can be observed in Puerto Rico’s Consumer Price Indexes for electricity and motor fuels, both of which rose about 2.4 times between 2001 and 2011, according to the publication commissioned by the bank and prepared by the Puerto Rico Institute of Statistics.
“The island’s economic during the last five years has underlined the economy’s dependence on oil as a major competitive disadvantage or as an investment opportunity for Puerto Rico,” the report noted. “Yet Puerto Rico is not the only island facing similar challenges or, for that matter, the most expensive one.”
According to the Energy Information Administration, Hawaii, with its population of 1.4 million, has the highest industrial electricity prices amongst U.S. states, even higher than in Puerto Rico.
This excludes the U.S. Virgin Islands, where commercial electricity prices reach over 40 cents per kilowatt‐hours. In the neighboring Dominican Republic, industrial electricity prices in dollars have also risen and are about the same as in Puerto Rico, the report stated.
Meanwhile, Ireland, with a population of 4.5 million, took advantage in the last decade of its natural gas resources to supply more than half of its electricity needs. Even then, Ireland’s industrial electricity prices continue to rank as among the most expensive in Europe, according to Eurostat, the official statistical agency of the European Commission.
Still, dollar‐denominated industrial electricity prices in Ireland are about 25 percent lower than in Puerto Rico, where the price per kilowatt hour hovers at about .30 cents.
“Our island geography demands greater efficiency, diversity and somelong overdue out‐of‐the‐box thinking to overcome the challenges of the rise in global energy prices,” said the Progreso Económico report, which Banco Popular distributes to members of the business community and the general public.