Retail gasoline prices in American Samoa are expected to decrease by this weekend when the new maximum allowable price (MAP), or wholesale price, is released on Aug. 15 according to testimony by ASG petroleum officer Sione Kava before the Senate Government Operations Committee last week.

Kava, along with Taulapapa Willie Sword, the American Samoa Country manager for Pacific Island Energy (PIE), testified before the committee, whose chairman, Sen. Galeai M. Tu’ufuli called the hearing to discuss petroleum product prices and other related matters.

PIE has the current contract to operate and manage the ASG tank farm in Utulei.

At the outset of the hearing, Kava explained the mission and role of the ASG Office of Petroleum Management (OPM), whose number one priority “is to make sure that we never run out of fuel” and secondly, to make sure that fuel is at the most reasonable price for the territory’s consumers.

“We are unique and very blessed in the Pacific with our arrangement, where the government owns the tank farm,” he said, and noted that elsewhere in the region, it’s the oil companies who own the tank farm facilities.

Kava walked senators through the pricing system put in place by OPM and stressed that American Samoa, as well as others in the region, obtain their fuel — transported from oil producing countries — from Singapore refineries.

And if the price of a barrel of oil drops, it takes time (up to six weeks) for that decrease in price to reach American Samoa.

“So if you hear that crude oil is lower than $60 a barrel — it starts from the oil fields,” he said and noted that oil also must be transported from the oil fields to the oil refineries. In the case of American Samoa, the refineries in Singapore, is where there is an added cost for refining the petroleum product.

Additionally, there is the cost of transporting oil from the oil fields to the refineries and the current rate is $2 per gallon. Furthermore, he noted, the cost of transporting fuel from Singapore refineries to American Samoa is 19 cents per gallon.

Upon arrival of the petroleum shipment on island, further costs are added, such as 26 cents per gallon to cover the supplier’s overhead and 52 cents per gallon for ASG rent, fees and excise taxes — the ASG costs.

Effective July 15-Aug 15, the gasoline MAP stands at $2.97 per gallon. “So this is the ceiling, the highest that the oil companies can sell to gas stations,” Kava explained, and noted that American Samoa Power Authority has its own contract, which is based on the diesel MAP, minus an additional discount — for example, 6 cents per gallon.

Kava also says that there may be gas stations which hold a contract with a supplier and that those gas stations will have a discount (for example, two cents) not including the MAP. He explained that gas stations then add on to the MAP their profit plus their overhead costs.

“The government does not control the add-on to the MAP by the gas stations,” he emphasized during the hearing.

As of last week, the average retail cost for gasoline was $3.43 per gallon and this means the gas stations were adding on about 46 cents per gallon to the MAP, he said, adding that the average retail price for diesel fuel at gas stations is $3.38 per gallon — which is about a 52 cents add-on from the road diesel fuel MAP.

Comparing American Samoa’s retail gas and diesel prices to other places (these prices are all in US dollars): Samoa — $4.63 for gasoline while diesel is $4.35; Fiji gasoline $4.23 and $3.42 for diesel.; Tonga averages $5.11 for gasoline while diesel is $4.84; Hawaii is $3.27 gasoline while diesel is $3.15; West Cost of the U.S — average gasoline is $3.33 and diesel $3.18.

Kava shared good news with the senators with the fact that the new MAP effective Aug. 16 will drop down to $2.75 per gallon for gasoline. “So if the trend goes on, in terms of what the gas stations have been adding to the MPA, we may be looking at about $3.24 average at the pump for gasoline under the new MAP,” he said adding that the road diesel will also see a light decrease in the MAP.

Kava pointed out that the prices for gasoline have continued to decline slightly for awhile.  Since October last year, the gasoline MAP was $3.65; it then dipped further down to $2.78 in June but jumped a little last month to $2.97.