El Caribe

Crude prices remained in the subsidy range

Liquefied petroleum gas is the hydrocarbon most subsidized by the Government.

The Government today has the fuel price setting day with less stress in recent weeks, arriving with a downward balance in the price of oil in the international market.
Of the five days that are used as a reference to establish an average of the price of the barrel of the benchmark crude oil from Texas, four were low. The reference days are from Thursday to Wednesday of the following week.

The scenario for setting the prices that will govern internally for fuels until next Friday the 25th, indicates that the Ministry of Industry, Commerce and MSMEs can keep them unchanged, with a lower subsidy for the Government. From Thursday the 10th to last Wednesday the 16th, only on Friday the 11th, the price of crude rose 3.12% to US$109.33. In the other four days, prices were down, including that of the last reference day, Wednesday the 16th, with a drop of 1.45% to close at US$95.04. In the five days of reference for prices this week, the average price of a barrel of WTI was US$101.96, and the subsidy range established by the Government is from 85 to 115 dollars per barrel.

Where is the market turning?

The mostly downward trend in the price of oil from Thursday the 10th to last Wednesday, March 16, and the preservation of the price scenario established by the Government to keep the price unchanged, suggests this. As this week the price band for a barrel of oil set by the Government to maintain the hydrocarbon subsidy was maintained, it is taken for granted that the prices of gasoline, the two types of diesel and liquefied petroleum gas, which are the by-products under “protected prices”, they will be the same ones that govern this week. Those prices are RD$293.60 for premium gasoline; RD$274.50 the regular; RD$241.10 the optimal diesel; RD$221.60 for regular, and RD$147.60 per gallon for liquefied petroleum gas (LPG).

On Monday, March 7, President Luis Abinader announced a series of compensation measures for the price increases of items in the basic food basket and oil derivatives.

The measures include subsidizing fuel prices internally, with the parameter that as long as the price of the West Texas Index (WTI) is above US$85 per barrel and below US$115, the Government would keep domestic prices unchanged. hydrocarbons at the level of March 4, 2022.

Government would assume up to RD$1,000 MM weekly

In his speech, the president explained that any price movement above US$115 per barrel will be transferred to domestic prices, without the inclusion of the ad valorem tax in their calculation. “With this measure, which would have an initial duration of 4 months, the Government would continue to assume a permanent minimum fiscal sacrifice of at least between RD$600 and RD$1,000 million pesos per week,” said Abinader.

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