Customs knows bulk fuel pricing mark-up

| 06/11/2015 | 28 Comments

Cayman News Service(CNS): The acting information commissioner has said that customs was right to refuse an FOI request and withhold information about the price bulk suppliers are paying for the fuel it imports into the Cayman Islands because lifting the lid would be a breach of confidence that would not be overridden by public interest. However, Jan Liebaers revealed that while details of how much the fuel suppliers pay for the oil product is exempt from release under the freedom of information law, the customs department is well aware of how much the two fuel importers are paying for the product.

In response to public outcry over the persistent and disproportionately high prices in the face of a global decline, Planning Minister Kurt Tibbetts recently brought changes to the dangerous substance law to give the Petroleum Inspectorate the legal right to access the pricing information of the suppliers, .

However, Liebaers revealed that the information government said it wants to collect is already on the invoices that are given to customs and that claims by government that it does not know how much mark-up the fuel suppliers make appear to be inaccurate.

Referring to comments on this issue made by government over the last few months, he said, “These statements are somewhat puzzling, as the two fuel importers have, since 2014, routinely provided fuel invoices that show the cost of imported fuel.”

Public won’t see gas price data

The FOI request to customs was made by George Ebanks, the organiser of the group ‘Cayman Is Fed Up With High Gas Prices’, which recently collected some 14,000 signatures on a petition in support of government efforts to make the import price of fuel public. However, his request was refused under the FOI law as Liebaers found that the suppliers could take successful legal action if the information was released.

Cayman News Service

Jan Liebaers, Acting Information Commissioner

In his latest ruling, following a hearing regarding Ebanks’ rejected request, the acting commissioner said the invoices were given to customs in “a manner importing confidence, that their disclosure would constitute an unauthorized and detrimental use, and that the common law public interest in disclosure does not override the public interest in maintaining confidentiality”.

In their submissions to the commissioner Rubis, one of the two fuel suppliers in Cayman, said, “The sensitive nature of the pricing arrangements will impact directly on the operation of Rubis’ customers, as well as on Rubis’ own business. Divulging such commercially sensitive information would put Rubis in breach of confidence with its customers and damage its relationship with them.”

Meanwhile, Sol pointed out that the total amount charged to Sol for the supplies, along with the per-unit cost, which gives a close approximation of Sol’s ‘mark-up’ on the supplies, is contained on the invoices.

“The confidentiality of this information is of critical importance to Sol’s ability to effectively compete and operate its business in Cayman,” the oil firm stated.

Liebaers, warned that revealing the prices would be more likely to result in price collusion — a concern that government has raised itself in recent weeks and a motivating factor behind the legislation.

“There is, understandably, a great deal of frustration amongst many residents of the Cayman Islands about what are perceived to be excessively high retail prices for fuel, as testified by the successful campaign started by the applicant and reflected in its name, ‘Cayman Is Fed Up With High Gas Prices’,” Liebaers said. “That there is a great deal of interest in this topic is adequately demonstrated by the many press articles and the swift actions of the government, which in recent weeks has, seemingly in record time, significantly altered the manner in which fuel imports are regulated in the Cayman Islands. These circumstances demonstrate that there is a genuine public interest in the fairness of fuel pricing.”

Nevertheless, he said, the disclosure of the requested records would constitute an actionable breach of confidence, and therefore customs is not required to disclose them.

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Comments (28)

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  1. Anonymous says:

    we can calculate the cost if we can find out how much money government makes on duty fess on petrol.

  2. Anonymous says:

    So in this opinion the Commissioner considered that the fact that disclosure could be actionable as a reason to refuse disclosure but came to the opposite conclusion on the Aina report?

  3. Just driftwood says:

    This isn’t my area so forgive my ignorance but this might help; it shows regular grade bulk fuel being sold at around $1.69/gal. in August. I would assume the export price isn’t far off, though I know shipping isn’t in the price.
    http://www.eia.gov/dnav/pet/pet_pri_refmg_dcu_nus_m.htm

  4. Anonymous says:

    The companies really meant “Do not let people know we are raking in oligopolistic profits”. If there was such profiteering then there would be no public interest in maintaining confidentiality. A very weak decision.

  5. Anonymous says:

    Er….I think your headline has a typo, it’s ‘Bilk’, not ‘Bulk’

  6. Anonymous says:

    George Ebanks, a good initiative you’ve undertaken but please do not overlook the fact that some stations have calibrated their pumps in US gallons when prices drop. I know for a fact as I once challenged an owner/manager when my gas purchase didn’t compute. He acknowledged that the pump had been mis-calibrated through some unknown action and gave me the $7 extra worth of gas I was owed.

    Please be vigilant on that !!

  7. Anonymous says:

    Of the 14,000 that signed the petition, how many drive gas guzzling US trucks? How many care about the environment? How many car pool to lower the cost of travel? Yet you request to know how much fuel costs so you can winge and moan to get the price down yet you could purchase an electric car or hybrid and do you bit to save the planet! If some of the 14000 are business owners and fuel impacts your profits, are you going to drop your prices (based on lower fuel costs) or just make more money! It’s business, it’s how the world works people.

    • Anonymous says:

      Welcome to Cayman!! When you are done here go and spout that same message in largest gas guzzling neighbour to the north and see how long it is before you get lead poisoning!!!

  8. Anonymous says:

    If the price of fuel doesn’t go down then we should find another company in the states that is willing to sell at a cheaper price and allow “competition”

  9. Anonymous says:

    The public, being the ultimate end user in every respect of not just gas at the pumps, but electricity, shop products and so on, absolutely is the only group with an interest in anything other than profiteering and this is another Cayman bullshit coverup protecting the rich at eh expense of the poor.

  10. Knot S Smart says:

    The simplest way to handle this is for government to set a profit margin for everybody in cents per gallon. The oil companies have gotten away with a fixed rate per gallon all of these years so they earned more profit when prices increased since they were paying duties based on the gallons.

    If the landed cost is $2 per gallon and import duties are .50 cents per gallon then the wholesaler should make .50 cents per gallon and the retailer should make .50 cents per gallon. That total would be $3.50 per gallon – which is reasonable…
    Of course based on prices in the country from which we buy our fuel – I doubt the wholesalers are even paying $2 per gallon landed…

    That does not mean that there will be no competition – the wholesalers can compete by finding lower prices when they purchase and the retailers can compete based on the service they offer…

    Drastic times call for drastic measures to bring back prosperity for the country…

    • Anonymous says:

      Price fixing equals rationing. Guaranteed.

    • Anonymous says:

      Import duties are .75 cents on gas and .80 cents on diesel not .50 cents. Fuel in the US is 2.50 per gal for 89 and if you convert to Imperial gallons at 1.20095 that works out to 3.00, Add .75 cents duty and the price is not that far off.

      • Just driftwood says:

        Are they buying their fuel at full US retail?

      • Diogenes says:

        you have adjusted for gallons, but are mixing CI and US $. $3 US would be $2.40 CI, making it $3.15 CI – quite a bot of a difference, even before allowing for the fact that neither the importer or the petrol station is buying at retail.

    • D. Trutherts says:

      (1) Nothing meaningful will be done concerning fuel prices until collusion is stopped.

      (2) Collusion will not be stopped.

  11. Anonymous says:

    How do we know the true price the wholesalers pay to buy their fuel. What is to stop them using a subsidiary as an intermediary to insert a mark up and mask actual price paid from their source supplier.

  12. WE, THE PEOPLE just need to know the actual cost paid for the gasoline and how you arrive at the end selling price that WE, THE PEOPLE BELIEVE IS TOTALLY UNJUST currently.
    We need a detailed “price walk down” showing the following:-
    [1] Actual cost paid at source;
    [2] ALL associated costs incurred [eg…frieght, tanker fees, duty, etc etc];
    [3] ANY other costs
    [4] = OUR CURRENT PURCHASING COST (cost at pump).

    Really, are we asking for too much here?????

    • Anonymous says:

      Last time I looked George you had not been elected by the people to represent the people, you just kind of decided to lead this charge. Admirable and correct but just stop the “we the people” stuff will ya? No one has given you the right yet to talk on my behalf. By all means make your point and rally like minded people to a worthy cause, but it is your view, not the collective view you are expressing.

      • @ Anonymous 8:19am. When I say “We the people” I am speaking about my own household!.. silly wonker…You yourself can go do as you please, including paying $10 a gallon for gas if you like…

    • Anonymous says:

      When you refer to “We the people” are you referring to the dozen or so that joined you on your 10,000 men march?

  13. Anonymous says:

    An interesting analysis. Given prices ex-dock in the US and the cost of shipping, $2.10CI does not see unlikely.

  14. Anonymous says:

    One would hope that consumers would rank higher than merchants in this equation, since the politicians and lawmakers have an oath of duty and obligation to the voting consumer and the defense of their rights. Maybe there ought to be more investigation into any strange political anomaly favoring business rights over consumer rights, and not just in respect to fuel. If only there were an ACC…

  15. Cass says:

    BS! This is something the public definitely has the right to know!

  16. Anonymous says:

    I find it mystifying that no-one can figure out the approximate cost of fuel when it arrives here.

    CUC passes on their fuel costs directly to their customers.
    My last bill from CUC contained a Govt. Fuel Duty cost of CI$76.48, and a Fuel Cost of CI$321.23.

    CUC pays Duty at a rate of 50cents per gallon on the diesel it imports. If my Fuel Duty was $76.48, then I must have used 152.96 gallons of fuel for that month (76.48 divided by 0.50)

    If ‘my’ 152.96 gallons of diesel cost $321.23, then that would mean that CUC paid $2.10 per gallon of diesel (total cost of fuel divided by number of gallons of fuel).

    Obviously I have no idea whether CUC actually pays a wholesale rate, but I would imagine that they at least get a very competitive price considering how much fuel they import.

    I am however aware that regular gasoline is more expensive than diesel.

    Or maybe I am naive in thinking that it is this simple???

    • Anonymous says:

      The issue is not what the diesel costs CUC but what the diesel and gasoline cost Rubis and Sol.

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