Low fuel prices put $1 billion in pockets of Panama consumers

LOW FUEL  prices generated annual savings of approximately one billion dollars that consumers in Panamahave used to buy other products and services according the Ministry of Economy and Finance (MEF)

The sharp drop in fuel prices has been a determining factor in reducing the inflation rate in Panama, which reached 0.16% in November, said  Deputy Minister of Finance, Eyda Varela Chinchilla.

According to government estimates, the cost of living in Panama will not exceed 0.2% in 2015 placing it among the lowest in a decade and the smallest in Latin America, which on average was predicted to close at 6.6%.

The low fuel has also resulted in an 8%  increase in sales of new cars reports La Prensa.

The drop in prices  also allowed the domestic loan portfolio to grow  11% in October, the residential energy consumption for the month increased by 7.3% and mortgage loans grew 16.3%, according to figures  from the Comptroller General.

Representatives of the oil industry in Panama are more conservative and estimate that consumer savings by decreasing fuel represents about $ 65 million per month or $ 780 million a year.

Currently, in the cities of Panama and Colon a liter of 95 octane gasoline is  $.658 ($2.49 a gallon), with 91 octane at $ 0.626 ($ 2.37 a gallon) and diesel at $ 0.483 ($ 1.83 a gallon) .

In July 2014, when oil prices, began falling 95 octane was $1.15 a liter ($4.38 a gallon), with 91 octane at $1,10 ($4.17 a gallon) and a liter of diesel 0.97 ($3.70, a gallon).

This means that these three main fuel  reductions have been $1.89, $1.80 and $1.87 a gallon, respectively, which means a drop of 43% and 51% a year.

In stock markets, both Texas crude barrel and Brent are currently at $37. The sharp drop of the “black gold” is attributed to the global oversupply that led to a  60% drop in the price of crude oil in the past 18 months.

International analyst and university professor Roko Setka Sagel acknowledged that the United States -a extracting shale oil and gas from the fracturing of rocks has strained the oil countries and has forced prices down. “The price has fallen below $ 40 a barrel. We are talking about prices that were not seen in 7 or 10 years and will continue falling,”. He predicted the that by  mid-2016 it will reach $20 a barrel .

If you reach this price, a liter of gasoline could be sold to consumers at  40 or  45 cents , prices similar to those it had in 1973 when a gallon sold for 35cents

Meanwhile, Wolfram González, another expert forecasts that a barrel of oil will not exceed $40 in the first half of the new year.

He noted that the United States seems ready to eliminate the export ban, which would mean that there would be another global supplier, and Iran would enter the game once sanctions are lifted over its nuclear program. “In fact, they are, readying refinery  production,” he added.

Other factors such as the doubling of demand for oil and its derivatives, another increase in fuel sales in the United States, as well as vehicles in the northern market and the Chinese economy still find without opening, represent important signs for this expert ensures that prices of both oil and its derivatives remain in the short term at current levels.