Minister of Energy and Environment Elizabeth Thompson told the Nation News over the weekend that "Government has shielded Barbadians from the full impact of crude oil price increases to prevent a hike in the cost of living, and a slide in the quality of life here."
"That is why Government has not passed on the full price increase to the public, because of the impact on inflation and the impact on society, quality of life, prices, everything.
"That is the rationale for the policy which the Government is using,"
The Minister and the Government have a difficult balancing act – trying to keep the price of gas and diesel low enough that the economy and daily lives of Bajans are not severely impacted… while not forgetting that "somebody" (all of us) will have to pay the piper in the end.
Whether the Government keeps the street price of vehicle fuel low through reducing taxes, direct subsidies to users (as with diesel) or some other slight of hand, it can't go on forever and it is not free…
… and there is not much the Government can further do to protect Bajans from happenings on the world markets.
And that was Part 2 of the Minister's message… Get ready, folks… because gas and diesel prices are about to skyrocket. Here is what she said…
The minister added that her ministry will be putting a pricing mechanism in place soon that would help determine the level of price increases here based on the hike on the international market.
Yes, it sounds like it is going to be an expensive year.
One of our readers directed us to an article written by Simpson Oil Ltd. Director Stewart Gill. The Nation News article "Living A Lie At State's Expense" states in part…
IT IS THE VIEW of Simpson Oil Limited that the true costs of petroleum products should be passed through to consumers on a timely basis.
Government has been heavily subsidising petroleum products in the last few years as prices escalate and, in doing so, has placed a heavy burden on itself…
…That really is inevitable because in the commodity market, you cannot beat the market over the long run. So my advice is: when prices on the world market increase, prices to consumers should be increased; likewise, when prices on the world market decrease, the price to the consumer should decrease….
…We have certainly seen that the consumption of fuel in Barbados has rateably increased over the last five years despite substantial increases, so I think it's fair to say that the price has not had a major impact on consumption and therefore I think people are living in a false sense of economy at the expense of Government tax revenue.
Stewart Gill is executive director of Simpson Oil Ltd.