More income to the treasury with a WTI that reached $109.8 and more stress for users of super gasoline

The The price of a barrel of WTI crude oil for May delivery, and which is a marker for Ecuador, continued to climb this Wednesday. WTI traded at $109.86 a barrel, up $6.45, from $103.41 at Tuesday’s close. In New York. Even for a few hours, the WTI was above Brent crude (European crude marker), when the behavior is normally the other way around. In any case, Brent registered a price this Wednesday of $111.64.

In the midst of this behavior, the net results for the treasury of Ecuador are positive, while the consumer of super gasoline is beginning to stress, since the released price could reach $4.20 or $4.40 per gallon in the short term.

Miguel Robalino, an oil expert, acknowledges that in Ecuador a first result is the impact on super gasoline users, who in his opinion are people who have new or high-end vehicles. Meanwhile, users of extra and ecopaís gasoline, as well as diesel, will not see the prices of these fuels modified due to the price freeze decreed by the Government. Consider that, after the new prices, there will again be a wave of migration of those who use super to extra or eco (which is subsidized by the freeze). Fernando Santos Alvite, former Minister of Energy, agrees that the big losers will be those who buy super gasoline, since it would exceed the $4 barrier.

Both also agree that there is a net benefit for the country due to the increase in crude oil, after discounting subsidies and the import of derivatives.

Santos calculates that Ecuador exports some 140 million barrels a year and imports some 50 million barrels of derivatives, so there will always be a net benefit. He explains that if the subsidies were some $1,500 last year (between diesel, gas and gasoline), this year it could rise by 30%, that is, reach about $2,000 million. While in 2021 Ecuador sold $8.5 billion between crude oil and derivatives, 2022 would be a record year with some $11 billion.

Meanwhile, Robalino explains that although there is a higher income for the treasury, it cannot be thought that the increase in income is in the same proportion as the rise in prices. This is because the State has to buy the derivatives, but it must also cover the subsidy for diesel and extra gasoline and ecopaís. Robalino considers that Ecuador could have an extra $300 million or $400 million left, and believes that these resources should be invested in the industry itself, improving important issues such as the SOTE situation, for example.

The issue of the price of crude oil, which has skyrocketed due to the war in Ukraine, is subject to various pressures, both from the West and from Russia and its allies.

According to Fernando Santos, the price of crude oil has already reached its peak, and although they are record prices at the moment, they could moderate after the president’s statements Joe Biden that it will release about 60 million barrels of its strategic reserves, about two million barrels per day, which would lead to a drop in price. From what is known, the US and Europe could take new measures to control the price. In addition, he considers that the warnings that the US has given in the sense that there would be terrible consequences against Russia if it were to attack any territory of NATO member countries, could be efficient so that the conflict is limited to Ukraine. .

Santos considers that the price could begin to fall and park at levels of $90, while Ecuadorian crude would be around $70.

However, OPEC along with Russia decided to slightly increase production by about 400,000 a day, when the increase is expected to be at least double. Robalino, for his part, notes that Russia is managing to get gas through China, which in turn is becoming a reseller of this fuel.