Local Vehicle Fuel Consumption Has Dropped In

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Credit reduction in trips, high prices, and fuel-efficient cars

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, July 14, 2014) – As gasoline prices stayed close to $5 a gallon over the past few years, vehicle fuel consumption on Guam has dropped.

Last year, gasoline consumption dropped to 39.9 million gallons for regular grade, from 41.09 million gallons in 2010, data from the Guam Energy Office show.

Guam's current gasoline prices, at $4.98 for regular grade, match the record-high prices Guam residents experienced in March 2012 and February 2013, Pacific Daily News files show.

Consumer preferences for more fuel-efficient cars and motorists cutting back on trips are some of the main reasons why gasoline consumption on island has dipped, said Joseph Bradley, chief economist and a senior vice president at the Bank of Guam.

"If I were to venture a guess as to which of these has had the greatest impact, it would have to be more fuel-efficient vehicles -- continuing technological improvements for conventional gasoline engines, plus a growing proportion of hybrids on the roads and fewer pickup trucks as the primary means of transportation," Bradley said.

Some of the savings motorists would have gained by opting out of gas guzzlers were partially offset by fuel waste as a result of traffic congestion from ongoing road projects and ill-timed traffic signals, according to Bradley.

Guam's motorists are paying nearly double the price of gasoline they paid at the pumps several years ago. In 2005, gasoline on Guam cost as low as $2.78 a gallon, Pacific Daily News files show.

The hot summer months in the northern hemisphere always drive up fuel costs, Bradley said.

The turmoil in Iraq is having some effect, but it isn't the main cause, he said. Unrest in the Middle East more generally is raising the risk of oil shortages, Bradley said.

The brewing conflict between Shiites and Sunnis could affect a substantial proportion of the world's oil production for an indefinite period of time, he said.

There also is the conflict in Ukraine, through which some of the most important pipelines for gas from Russia to the rest of Europe pass, Bradley said. Add to that the continuing disruption of oil supplies from Nigeria, continued problems in Sudan and a blown pipeline in Egypt and another in Libya, "and you have set the stage for pricing tensions in the oil futures markets," Bradley said.

The decrease in gasoline use on Guam between 2010 and 2013 is still slight, at 3 percent, but the volume of gasoline used last year was 1.1 million gallons fewer compared to the total consumption three years earlier, Guam Energy Office data show.

The government of Guam collects 11 cents in "liquid fuel tax" for every gallon of gasoline sold.

Liquid fuel tax revenue decreased by 5 percent to $9.8 million in 2013 compared to a year earlier, and the decrease was primarily the result of a dip in aviation fuel tax collections rather than the gasoline, according to a government audit report released in April.

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