Press Statement 5-2021 - The Vital Group - Energy Supplier FSM Micronesia

July 23, 2021

CONSISTENTLY HEIGHTENED OIL PRICES LIKELY TO RESULT IN FURTHER PRICE MOVEMENTS

The Vital FSM Petroleum Corporation (FSMPC) announces to its customers that a second series of price movements to its wholesale ARP prices (unleaded gasoline, diesel and kerosene) has been scheduled for the coming months of August, September and October. FSMPC confirms that the first price increase of fifteen cents per gallon ($0.15/gal) will go into effect on Tuesday, August 10, 2021.

FSMPC Chief Financial Officer (CFO) Mr. Johnny Adolph said, “As we are aware, global fuel prices have been on an upward movement since May 2020. In response to this year-long trend of upward price movements, prices for our ARP & Walk-in Customers increased over the past three months by a total of forty-five cents per gallon ($0.45/gal).”

Figure 1: The average international MOPS price from January 2020 to June 2021 shows that international oil prices have consistently recorded upward movement. MOPS prices dropped down as low as $19.52 per barrel of unleaded gasoline in April 2020, but has moved +$57.26 per barrel in the past 15 months and as of June 2021.

Adolph said, “In January 2021, one gallon of gasoline in Guam was $3.88, and $3.90 in Pohnpei, a difference of only two cents ($0.02/gal). However, since July 2, 2021, that same gallon of gasoline now costs $4.72 in Guam, while in Pohnpei, a gallon costs on average $4.35. Guam prices react directly to the frequent price movements of international prices, and in the past seven months has increased eighty-four cents per gallon ($0.84/gal), while Pohnpei and FSM prices have only increased forty-five cents per gallon ($0.45/gal).

“While we had anticipated that the forty-five cents per gallon ($0.45/gal) increases that were implemented from April to June would be sufficient in addressing increasing international prices, they continue to rise and the gap between the cost of fuel and our wholesale price continues to grow. With that said, a gallon of gasoline in Pohnpei currently costs thirty-seven cents per gallon ($0.37/gal) less than a gallon of gasoline in Guam. We are holding off from increasing prices in July, but will not be able to avoid increasing in August,” CFO Adolph continued.

Figure 2: A snapshot of retail prices in Guam (orange) and Pohnpei (yellow) from December 2020 to early July 2021 shows the series of price increases implemented in both locations. Guam and Pohnpei prices were within $0.02 per gallon of each other in January 2021, but since then, Guam prices have moved +$0.82, while Pohnpei prices have moved +$0.45. Movements since January 2021 in Guam and Pohnpei are numbered above.

CFO Adolph concluded, “We’ve absorbed as much of the year’s increases as our pricing framework has allowed, and at this time have little choice but to now implement further increases. We will continue to monitor and analyze movements of the MOPS, international and regional retail prices, before we implement the price increases scheduled for September and October.”

For inquiries, email info@fsmpc.com.