Driven by the demand for LP gas, super gasoline and diesel, fuel consumption in 2018 reached 3.386 million liters, 2% more than that recorded in 2017.
Data from the Costa Rican Petroleum Refinery (Recope) detail that between 2017 and 2018 total fuel consumption in the Costa Rican market increased by 68 million liters, going from 3,318 million to 3,386 million liters.
The Supreme Court has ordered the cost of giving bonuses to employees of the state run monopolistic distributor to be incorporated into fuel prices.
EDITORIAL
The resulting increase in fuel prices forces the country's economy to directly pay for the privileges enjoyed by some public officials, aggravating a situation in the private productive sector which must find new ways of staying competitive in a local context which is becoming increasingly adverse, with an unfavorable exchange rate for the export sector and rising production costs.
Concern over the serious impact on the productive sector of a 72% increase in gas prices has faded, while accusations of inefficiency and a monopolistic state oil company still persist.
Although the ARESEP is expecting to submit to a public hearing the new pricing methodology which would eliminate the subsidy from the cost of Liquefied Petroleum Gas (LPG), asphalt and bunker fuel, and increase the cost of a 25 pound cylinder from ¢ 6,410 to ¢8,470, the Government of the Republic has decreed a new sector policy for prices, in order to avoid the increases proposed by the regulator.
The State fuel distributor wants to include the cost of refining carried out in the country in fuel prices, even though it has not refined anything since 2011.
From a statement issued by the Chamber of Industries of Costa Rica:
• RECOPE wants to include the cost of refining carried out in the country in with fuel prices, even though it has not refined anything since 2011.
Outraged citizens are demanding the abolition of the state fuel distributor, which has a monopoly on the management and sale of all petroleum products.
EDITORIAL
Citizen demonstrations - unique because they are not specifically directed against the current government but against a state run company - are occuring at a time when news stories in Costa Rica are full of information about the privileges enjoyed by some sectors of the state bureaucracy, who earn the equivalent to twice and three times what is earned in the same roles in the private sector.
A report from the state run and monopolistic Costa Rican Petroleum Refinery indicates that during 2014 the country consumed 19 million barrels of oil.
From the report by the Costa Rican Petroleum Refinery (RECOPE):
According to the records from the Costa Rican Petroleum Refinery (RECOPE SA), sales for the period January to December 2014 increased by 2.12% compared to the same period in 2013, going from 3,023,400 m³ in that year to 3,087,620 m³ in the past year (equivalent to 19 million barrels).
The formulas that determine the prices of products sold by the monopoly which is the state run oil company contain factors that create subsidies for gas and asphalt consumers at the expense of gasoline and diesel consumers.
An article published in Nacion.com reports on the results of an investigation into the calculation of consumer prices of automotive fuel, which states that since August 2008 changes have been put into effect to the formulas determined by the Regulatory Authority for Public Services (ARESEP), harming "... consumers of diesel and gasoline, who pay more per liter than the asphalt companies and gas users who save millions from the lower prices."
Businesses are asking for the elimination of the state oil monopoly by Recope as a solution to reducing the cost of energy and fuel.
The union rejected the possible entry into the petroleum agreement because of the interference that could come from the Venezuelan government in Costa Rican politics and because it means buying oil at the cost of greater indebtedness in the future.
High fuel prices are seriously affecting the economy, making it necessary to consider removing the state monopoly in favor of free importation.
Jorge Guardia in an opinion piece in Nacion.com explains that the country must make two important decisions, the first is what to do with Recope and the second how to reduce fuel costs. He sets out three options for the first situation.
The directors of the Costa Rican state run entity RECOPE say that "there are already a number of studies which prove profitability," but as they can not produce them, they have announced that universities will be hired to do so.
Added to the $50 million that has already been spent on the project, will be these extra costs for more technical studies, and the recruitment of "national universities who will delve deeper, from academia, into the information which international consultants have already verified and approved."
The limited information presented by the state run refinery RECOPE shows that the Costa Rican government will bear the entire risk of the $1.5 billion project.
Editorial
It is still not known how much the new refinery will cost, but the head of Economic and Financial Studies unit at Refinadora Costarricense de Petróleo (RECOPE), said: "The latest figure is around the $1.5 billion mark."
Costa Rica, where fuels are under the state monopoly of the Costa Rican Oil Refinery (RECOPE), has become the country with the highest gas prices in Central America.
Juan Carlos Hidalgo, on his blog on Elfinancierocr.com, says the latest increase pushed up the price of better quality gasoline above $1.50, and that even President Chinchilla has made public her concern over the situation.
Complaints have been made about loss of competitiveness due to fuel costs being the highest in the region.
A study by the National Chamber of Agriculture and AgroIndustry (CNAA) states that in June the price of a gallon of diesel cost, on average, $4.71 in Costa Rica, $3.76 in Panama, $4.02 in Guatemala , $4.44 in Nicaragua , $4.15 in El Salvador , and $4.20 in Honduras.
Costa Rican fuel prices have been increased by 2.5 percent on average, the public services regulator, Aresep, announced.
Diesel prices have been raised from US$1.09 a liter to US$1.15. Regular gasoline goes up from US$1.15 to US$1.18 and premium-grade gasoline from US$1.18 to US$1.21.
The nation's refinery, Recope, had asked for steeper increases to offset higher world prices for crude.