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.
Monday, October 29, 2012
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.
"The value of a barrel of oil has been falling for almost two months and still in Costa Rica we are still seeing increases in gasoline. Yet, as usual, the president went off on a tangent blaming the 'absurd' formula of the Regulatory Authority of Public Services (ARESEP) to calculate fuel prices, when in reality it is absurd that we still have the state monopoly of the Costa Rican Oil Refinery (RECOPE).
The country has already gone through the "trauma" of opening up two sacred monopolies in the Costa Rican psyche: telecommunications and the insurance industry. In the first category we have seen in just one year that quality and phone penetration has increased significantly without fees going up as many people feared. In insurance competition has also resulted in great benefits for consumers. Therefore the resistance to opening up the Recope monopoly should be minimal. There is no justification at all for a monopoly on the import and refining of fuels – it should be noted, the countries with the lowest prices in Central America have competition in this sector.
The state run oil company in Costa Rica registered losses above $24 million during the first nine months of 2015, despite having the highest prices in the region.
In the first nine months of 2015 the Costa Rican Oil Refinery lost more than $24 million. The state run company, which has had a monopoly in refining and sale of fuels in Costa Rica for more than half a century, has payroll costs representing 56% of its total expenditure.
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).
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 Costa Rican Comptroller vetoed an agreement that would have allowed the construction of a $1 billion petroleum refinery.
The accord that was signed in 2008 between the state-owned companies, Costa Rican Petroleum Refinery (RECOPE) and the Chinese National Petroleum Corporation (CNPC) and authorized by president Oscar Arias, would have allowed the construction of a $1 billion, 12,000 barrel refinery in the Costa Rican Caribbean .
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