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The natural explanation for what happened this Monday, April 20, with the historic fall in US oil prices, is that in Chile we could, in one of them, pay less for fuel. No wonder several weeks in a row in which ENAP reported a decrease in these values.
But the truth is that none of this will happen, and, with the exception of some reductions, such as those already noted, it is not expected that what we are canceling will plummet.
Chile, through ENAPimports more than 90% of used oil from South America: Brazil and Ecuador account for 60% of this import, while Argentina and Colombia account for 30%. Small imports are also made from Canada and England. And all these are countries that do not integrate OPEC,
“We did not see a drop in oil prices, since almost 100 percent of our needs are imported, which means that the exchange rate affects us very much. And despite the fact that the dollar has not grown so much in recent days, it is located on a higher territory than last year (yesterday, the US currency closed at 849.45 pesos. The cancellation of a specific tax in force in Chile (established in 1985) to finance the reconstruction of the country after the earthquake this year and representing about a third of what is paid per liter) depends on fiscal policy, and this area is very difficult ”points to the economist and professor of economics at the University of Chile, Alejandro Alarcon,
He is also an economist and professor at the University of Andres Bello, Gustavo MarcosHe added that the operation Fuel Stabilization Mechanism, Mepco, which began working in August 2014, to moderate prices and have a slight effect on fiscal accounts.
“This fund is accumulating and striving to smooth the price curve so that there are no sudden changes in the direction of increase. Without this, the prices here would have been even higher. What we pay in Chile may fall slightly due to the international situation, but we can’t think of a sharp fall, as the dollar has grown significantly compared to the previous year, and this is a vital factor for our market, given the very high level crude oil we import. “.
The rout of crude oil in the United States
Yesterday, traders frantically fled from US oil futures expiring in May, which led to lower prices for the first time in history since 1983, when records began. This was because almost no buyer was ready to receive barrels of crude oil, because there was no place to store them.
Futures for the coming month crude Wti (or West Texas Intermediate, a mixture of various types of crude oil produced in the United States, refined mainly in the North American Midwest and the Gulf of Mexico, and used as a benchmark in the US oil market), reached a level that had not been before, closing a day at -37.63 dollars per barrel, which meant a loss of 55.90 dollars compared to the previous session. Even at the most inopportune moment, she reached -40.32 dollars.
This was due to the fact that getting barrels already bought was not a business, because due to low demand (since billions of people are at home to stop the spread of coronavirus) and accumulated reserves, the storage space is about to disappear.
The world’s largest oil producers agreed to cut production by 9.7 million barrels per day, trying to maintain control of global supplies as demand decreases, but this decline will not begin until May.
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