This paper investigates the relationship between the prices of premium gasoline and diesel fuels in Belize and international crude oil prices, focusing on the role of government-imposed costs as a moderating factor between 2012 and 2024. By applying annual average prices of West Texas Intermediate (WTI) crude oil, domestic fuel prices, and fuel-related taxes and margins, the paper applies correlation analysis and linear regression modelling to measure the magnitude of these relationships. The results indicate a very strong positive correlation between WTI prices and fuel prices for both premium gasoline (r ≈ 0.69–0.75) and diesel fuel (r ≈ 0.71–0.78), while the imposed costs contribute about 30–45% to the final retail price and serve as a policy buffer during global price shocks. A regression-based counterfactual analysis indicates that the actual 2024 fuel prices deviated from the predicted values based on historical relationships, suggesting the presence of unmodeled costs such as transport, margins, or fiscal adjustments. The results have significant implications for fuel taxation policies, revenue stability, and energy diversification policies in small import-dependent economies. To improve the analysis, this revised version includes a literature review on analogous relationships in other small island developing states (SIDS), data tables with diesel fuel comparisons, and sensitivity tests to improve the robustness and interest of the analysis for policymakers and researchers.
Keywords: fuel prices, crude oil, taxation, Belize, energy policy, regression analysis, SIDS, diesel
Abbreviations: WTI (West Texas Intermediate), BZD (Belize Dollars), OLS (Ordinary Least Squares), USD (United States Dollars), SIDS (Small Island Developing States), GST (General Sales Tax), ET (Environmental Tax)
