Oil prices fall and gas prices rise

The reason given by the government for the sudden changes is “the increase in oil prices” and the hike in the consumption of diesel in the U.S.

Ironically oil prices tumbled on Wednesday to a little above $36 a barrel and at one time were just above $35, as new U.S. government reports show crude inventories continuing to build, suggesting that demand for oil and gasoline will not rebound anytime soon.

A reason for an anticipated rise is the OPEC (Organization of Petroleum Exporting Countries) production reduction of crude to 2.5 million barrels a day.

OPEC wants to get the prices to $75 per barrel, but demand around the world continues to fall.

After 10 straight days in which prices rose, the average cost for a gallon of retail gasoline finally fell overnight, catching up to crude markets that began to give way a week ago.

The Panamanian government announced that the increases in the prices will be applicable from Saturday January 17, which no doubt will provoke a stampede to the gasoline stations.

Those gasoline stations that do not maintain the fuel prices until then will be severely penalized.

However, if previous history is repeated, stations will miraculously be out of supplies until the new prices kick in.

The Hydrocarbon director of the Energy Secretariat, Wolfram Gonzalez said the fuel prices were stable for almost three and half months without registering a hike due to the slowdown of the United States economy and the low demand, but recently the oil costs has started to stabilize.

Gonzalez said that proof of that is that in the last 14 days, the oil prices began to climb which coincided with the Israel-Palestine conflict. Other experts said the conflict had no effect on prices.

The Hydrocarbon director said that although the new increases will push the prices to over the $2.00 mark, Panama has the cheapest gasoline in Central America, especially in comparison with Costa Rica where 95 octane gasoline is $3.29.

That is little consolation for the Panamanian consumers who are still having to pay exorbitant amounts of money for food and a strong possibility that electricity bills could go up again a day after the Public Service Authority announced that the tariff will go down by 20 percent.

The Interior Commerce deputy Minister, Manuel Jose Paredes said that not all is bad news, because the price of fuel will be revised again and it could go down depending of the market’s behavior, which appears to go down again.