Press Statement 1-2023 - The Vital Group - Energy Supplier FSM Micronesia

PRESS STATEMENT 1-2023
August 14, 2023

FUEL PRICE CHANGES QUARTER 3

Pohnpei, Federated States of Micronesia – The Vital FSM Petroleum Corporation (“Vital FSMPC”) wishes to announce new prices of unleaded gasoline (ULP), diesel (ADO), and kerosene (DPK) which will be implemented in August 2023. This was determined after the review of global trends, domestic and regional prices.

FSM is directly impacted by the world market prices for refined oils and as such, any changes to the world market prices will eventually be reflected in fuel prices in FSM.
The decrease in prices are as follows:
• ULP – decrease of $0.15 per gallon;
• ADO – decrease of $0.15 per gallon; and
• DPK – decrease of $0.15 per gallon.

The year 2023 has seen notable movements in international oil product prices impacting regional and ultimately domestic prices over a period. This movement in prices is expected to continue noting an increase over time as according to a report published in a CNN article on July 3rd, 2023, the US Energy Administration forecasted global fuel prices to increase notably towards the latter half of 2023 and early 2024 due to the planned decrease in oil production by OPEC+ and Russia. The forecast is for US Oil prices to increase by 11.4% in the first quarter of 2024¹.

¹ Oil prices: Saudi Arabia and Russia curb oil supply again | CNN Business

International Price Movement

*Figure 1 –The ULP prices dropped in July by about 11% compared to prices in January 2023 while ULSD and JetA1 dropped by 20% and 19% respectively.*

Regional Price Comparison – ADO (diesel) and ULP

At the regional level pump prices in Guam for ADO and ULP have remained steady since May as can be seen in the figures below.

Figure 2: As of July 18th, 2023, variance for ADO (diesel) pump prices between Guam and Pohnpei is still at $ 0.87 (Guam = 5.23/ usg and Pohnpei = $ 6.10/usg). No new pump prices for Guam since May 3rd 2023.

Figure 3 – As of July 18th, 2023, Variance for ULP pump prices between Guam and Pohnpei is still at $ 0.65 (Guam = 4.85 usg and Pohnpei = $ 5.50/usg). No new pump prices for Guam since May 9th, 2023.

Vital FSMPC has monitored and evaluated the global and regional market trends for oil products between the last quarters of 2022 and first quarters of 2023 and despite the fluctuation of rates in markets, the domestic level prices have remained steady over the past few months.

The methodology used by the Vital FSMPC focuses on price stabilization over a period before it eventually rises or falls. Our Policy Framework allows us to stabilize domestic prices against international volatility and benchmark prices against neighboring countries pump prices.

This approach helps our customers plan their spending and budget related to fuel products and in looking out for customer welfare we try to avoid significant fluctuation in prices which can impact day-to-day businesses and affairs of customers.

The Chairman of Vital FSMPC Mr. Faustino Yangmog stated that Vital FSMPC has been monitoring trends and ensuring that energy security is maintained in FSM. The company’s plans allow ability to withstand shocks, have financial capability to be able to purchase and retain stocks on island over a period of time. He added that the pricing policy framework adopted by Vital FSMPC allows for such stability in prices during massive fluctuations globally and for now considering the latest trends, a decrease is due for the customers of fuel products in FSM.

However, according to the Chief Risk and Compliance Officer, Mr. Johnny Adolph, responsible for ensuring that company risks are managed and policies complied with, there will be continued price volatility periods. He added that the Vital FSMPC will continue to monitor the prices at the domestic, regional and international levels and keep our customers informed of the next round of changes in the prices.

For inquiries, email info@fsmpc.com.