More income to the treasury with a WTI that reached $109.8 and more stress for users of super gasoline
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- 03 Mar 2022
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The price of a barrel of WTI crude oil for May delivery, and which is a marker for Ecuador, continued to climb this Wednesday. WTI traded at $109.86 a barrel, up $6.45, from $103.41 at Tuesday's close in New York. Even for a few hours, the WTI was above Brent crude (European crude marker), when the behavior is normally the other way around. In any case, Brent registered a price this Wednesday of $111.64.
In the midst of this behavior, the net results for the Ecuadorian treasury are positive, while the consumer of super gasoline is beginning to stress, since the released price could reach $4.20 or $4.40 a gallon in a short time. term.
Miguel Robalino, an oil expert, acknowledges that in Ecuador a first result is the impact on super gasoline users, who in his opinion are people who have new or high-end vehicles. Meanwhile, users of extra and ecopaís gasoline, as well as diesel, will not see the prices of these fuels modified due to the price freeze decreed by the Government. He believes that, after the new prices, there will again be a wave of migration from those who use super to extra or eco (which is subsidized by the freeze). Fernando Santos Alvite, former Minister of Energy, agrees that the big losers will be those who buy super gasoline, since it would exceed the $4 barrier.
Both also agree that there is a net benefit for the country due to the increase in crude oil, after discounting subsidies and the import of derivatives.
Santos calculates that Ecuador exports some 140 million barrels a year and imports some 50 million barrels of derivatives, so there will always be a net benefit. He explains that if the subsidies were about $1,500 last year (between diesel, gas and gasoline), this year it could rise by 30%, that is, reach about $2,000 million. While in 2021 Ecuador sold $8.5 billion between crude oil and derivatives, 2022 would be a record year with some $11 billion.
Meanwhile, Robalino explains that although there is a higher income for the treasury, it cannot be thought that the increase in income is in the same proportion as the rise in prices. This is because the State has to buy the derivatives, but it must also cover the subsidy for diesel and extra gasoline and ecopaís. Robalino considers that Ecuador could have an extra $300 million or $400 million left, and believes that these resources should be invested in the industry itself, improving important issues such as the SOTE situation, for example. Read More…
