Home' Trinidad and Tobago Guardian : June 27th 2013 Contents The energy sector in T&T is vital
to the health of the economy.
The sector accounts for
approximately 40 per cent of
gross domestic product and
generates 87 per cent of the
country's total merchandise export revenue.
Our cargoes are shipped to many destinations
over the world which includes the United States,
China, Europe and South Korea.
Of these major energy commodities exported,
US natural gas, crude oil, ammonia, methanol
and diesel are the largest contributors to the
energy sector's export earnings. It is important
that we track changes in the international price
of these traded commodities as any drastic
fluctuations can mar government revenue and
The Energy Chamber collaborated with the
Central Bank to develop the Energy Commodity
Price Index (ECPI), which is an average of
global commodity prices of the key energy
exports of T&T weighted by each commodity's
relative share of the value of energy exports.
The commodities and their weights are: US
natural gas (40.0 per cent); oil (16.6 per cent);
ammonia (11.8 per cent); methanol (9.4 per
cent); diesel (7.0 per cent); motor gasoline (4.3
per cent); natural gasoline (3.5 per cent); jet
fuel (2.7 per cent); propane (2.4 per cent); and
urea (2.3 per cent). The intention of this price
index is to provide both the public and the
Government with information on price trends
in the energy sector, which can be used for
The ECPI marginally improved from 136.42
in April 2013 to 136.67 in May 2013 -- two per
cent less than its value for the same period in
2012. Refer to Figure 1.
WTI Benchmark crude and motor
gasoline prices increase while
Henry Hub prices slip
The jump in the index occurred largely
because of increases in the price of crude oil
and diesel. After a continuous decline in its
value between February and April 2013, the
West Texas Intermediate (WTI) crude bench-
mark price increased slightly to US$94.67 per
barrel from its previous three month average
of US$93.4 per barrel. It is not unusual that
diesel price movements track changes in the
cost of crude oil.
A decrease in refinery utilisation across the
Midwest in the US brought on a rise in the
price of motor gasoline/diesel, from US$268.50
cents per gallon to US$270.8 cents per gallon.
According to the US Energy Information
Administration (US EIA) refinery utilisation in
the Midwest has fallen steadily since the start
of 2013, and is about 83 per cent of capacity,
below the US average of 87 per cent.
This decline in utilisation comes on the heels
of routine turnarounds, maintenance and
upgrade work and unplanned outages which
have restricted gasoline production and main-
As it relates to the Henry Hub natural gas
benchmark price, it should be noted that while
the ECPI captures the Henry Hub spot price,
the actual prices received for T&T natural gas
cargoes are higher than the natural gas spot
price, given that T&T sells the commodity to
different markets at prices not captured by the
For the month of May 2013, the Henry Hub
natural gas benchmark price averaged US$4.05
per mmbtu -- 11 cents less from its average of
US$4.16 per mmbtu as seen in the previous
month. The mild May weather resulted in a
cut in fuel demand for heating and a consequent
decline in the natural gas benchmark price.
However, the Henry Hub gas price is expected
to climb during the summer period with the
expected increase in cooling demand and with
the anticipated disruptions in natural supply
brought on by the hurricane season. (See Figure
2) The National Oceanic and Atmospheric
Administration predicts that there will above-
normal tropical weather in the Atlantic Basin
during the current hurricane season.
The Atlantic hurricane season officially began
on June 1 2013 and will end on November 30.
The EIA estimates that within the Gulf of Mex-
ico, there is a 58-per cent probability of offshore
natural gas production experiencing outages
during the current hurricane season that are
equal to or larger than the 32 bcf of production
shut in during the 2012 hurricane season.
Ammonia and urea prices
underperform in May 2013
Although methanol prices remained
unchanged at US$ 510 per metric tonne between
April and May 2013, it exceeded its value in
May 2012 by a significant US$74 per metric
tonne. Ammonia and urea prices however did
not share the same fate.
Average ammonia prices declined from
US$557.5 in April to US$549.5 per metric tonne
in May 2013. Similarly, urea prices dropped
from US$ 379.9 to US$ 333 per metric tonne
during the same period. Refer to Figure 3.
The fall in the average ammonia price has
BG18 | COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt JUNE 2013 • WEEK FOUR
The Energy Commodity
Price Index improves
marginally in May
been largely attributed to reduced demand
for fertiliser by farmers, as a result of the
wet May weather which delayed the start of
the corn planting season in the US Midwest.
The wet weather also negatively affected the
consumption of urea by farmers.
Moreover, the demand for ammonia from
producers of caprolactam (a synthethic poly-
mer) and acrylonitrile in countries on the
Far East also declined, with many plants
operating at around 70 per cent to 80 per
cent capacity. Caprolactam is used to produce
nylon and acrylonitrile is used in the man-
ufacture of synthetic rubbers and acrylic acid,
among other things.
At the International Fertiliser Association's
annual conference held in late May this year,
there has been little expectation for ammonia
prices to recover for some time.
As always the Energy Chamber remains
committed to imparting timely information
and engaging the public in dialogue, on those
issues which impact on the development and
health of the T&T energy sector. For more
information on this article, please contact Naz-
era Abdul-Haqq at: firstname.lastname@example.org or visit
our Web site at: www.energy.tt.
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