Bermudian families may get hit with a stroke of luck as we hit Bermuda’s worst time of year for power consumption at what may prove to be the best time to be hitting it.
Those who recall the last time we looked at the correlation between oil prices and local fuel and power inflation may recognize the similarities with the above chart. Again, we’re comparing the Fuel and power inflation portion of the Consumer Price Index at a benchmark of approximately 100 for April 2006 (still can’t get that number to match exactly, I get 100.4) with the WTI – Cushing, Oklahoma spot price per barrel of oil.
As we noted last time, due to shipping duration Bermuda actually has to purchase it’s oil/fuel more than 2 months before it actually begins being consumed here. As the Bermuda Sun suggests:
"Experts say that even higher prices are on the way – there is a two-month lag effect before the most recent jump in world oil prices impacts on the island."
Those high prices have now taken their toll as they peaked and fell. So let’s again adjust the phase of oil prices by 2 months later to get an idea of what we can expect in the coming months.
So here we have a depiction of oil prices delayed by two months. What is interesting to note is the prolonged top of local fuel and power inflation and the delay in the impact of dropping oil prices. This certainly raises many questions, though they will have to wait for another article and perhaps some investigation into potential causes.
Of note, should fuel and power inflation follow the trend that has occurred we should hopefully be looking at a summer of gradually lower fuel prices, meaning lower electricity bills corresponding with the exact time of year that people tend to consume the most. This is good news for those hit hardest by the most recent recession so let’s hope the trend carries through.