Sophia's Blog

Sophia's Blog

Effects of Texas oil on the Dominican Republic

Santo Domingo, DR.

 The rise in Texas oil prices is an immediate cascading effect on fuel costs in the Dominican Republic.

This is the number one benchmark in our Caribbean country, with a vehicle fleet of 4,842,367 units of cars of various brands, styles, and utilities.

As soon as the prices of the product extracted from Texas and marketed in New York skyrocket and, from there in the Dominican Republic, consumers begin the rhythm of a consequent and resounding rise.

As that was the recurring theme of other years and the competitiveness agreements have regarding supply and demand, an increase in fuel prices in this country should not be surprising.

However, for some powerful reason, the government has kept fuel prices frozen since the first quarter of this year, to consumers’ surprise.

The measure is encouraging and strange, at the same time, in a country where this year 207,491 more units were added to the vehicle fleet than in 2019.

Everything seems to indicate that the authorities, basically the Ministry of Industry, Commerce, and MSMEs, have found a way to maintain price stability, at least for a while.

It is not usual for a government that is practically starting a mandate and is forced to bear the economic burden of buying vaccines against Covid-19, to stop receiving income due to a commercial nature within all legal establishments.

It is not every day that without being in time for political campaigns or questioned administrative tactics, it is possible to maintain the prices of rising products in all parts of the world.

For example, the intermediate oil of Texas (WTI) closed this week with a decrease of 1.5% and stood at US $ 71.04 a barrel, according to data provided by the US central bank.

WTI futures contracts for delivery in July cut US $ 1.11 compared to the previous day’s close at the end of operations on the New York Mercantile Exchange (Nymex).

Benchmark crude in the United States has changed its price by the highest grade in two and a half years.

This product had obtained remarkable gains based on the reopening of world economies, hand in hand with global expectations of overcoming the health pandemic very soon.

Everything seems to indicate that the Federal Reserve did not take the necessary measures and is now forced to raise its inflation outlook.

There has even been talking of withdrawing commercial stimuli, anticipating a scale-up in fuel prices.

This is how the intermediate oil price of Texas closed this week has overcome the psychological barrier of fear of rising costs and maintaining its highest value in the last two years.

This means that in this half of June 2021, everything returns to the starting point before the International Energy Agency (IEA) assured that the energy market recovered at a good pace. This statement included the precision that global demand would return to pre-pandemic levels by the end of 2022, insisting that OPEC open its taps.

However, in the Dominican Republic, the strategies seem to be more loyal to the needs of the people.

Therefore, Minister Víctor (Ito) Bisonó will have to face a new battle that begins with the shock that the global prices of energy, oil, and its derivatives have just caused.

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