Barbados SLOW IN PASSING ON OIL PRICE SAVINGS
Despite a recent drop in world prices, Barbadians continue to pay more for gasoline and other energy products than the majority of their Caribbean Community (CARICOM) neighbours.
In fact, the domestic price of gas remains well above the global average, with motorists here currently forking out US$1.35 per litre, which is 38 cents above the world average of US$0.97, as at February 8.
Just yesterday, the Division of Energy announced the latest adjustment to the prices of gasoline, diesel, kerosene and liquefied petroleum gas, saying the adjustments were due solely to changes in the cost, insurance and freight of these refined products.
In a statement issued by the Barbados Government Information Service (BGIS), the Division said, “the retail price of gasoline will move from Bds$2.71 [US$1.35] per litre to $2.69 [US1.34] per litre, while the price of diesel will drop Bds$1.89 [US$0.94] per litre to $1.82 [US$0.91] per litre.
The ministry also announced that the price of kerosene had fallen to 80 cents per litre, down from 95 cents.
“These represent decreases of two cents, seven cents and 15 cents per litre respectively,” the Ministry said.
However, even with these changes, the domestic prices of these vital energy products remain higher than the world and Caribbean averages.
A check with Globalpetrolprices.com, the online database which constantly tracks the movement of energy prices, showed that Barbadians are paying the most for gasoline in the region, along with Cuba, at US$1.35 per litre.
Also retailing above the world average of $0.97 per litre for gasoline are The Bahamas at US$0.99; Antigua and Barbuda and Costa Rica both at US$1.02; Dominica Republic US$1.01; St Lucia US$1.06; the Cayman Islands at US$1.12; Grenada at US$1.20 and the British Virgin Islands at US$1.24.
However, it is more cost effective to purchase gasoline in places such as Haiti, whose domestic price currently stands at US$0.82; Jamaica at US$0.86; St Vincent and the Grenadines US$0.86; and St Kitts and Nevis at US$0.94.
And at US$0.48 per litre, energy-rich Trinidad & Tobago’s gasoline price is the cheapest of all in the region.
“The difference in prices across countries are due to the various taxes and subsidies for gasoline,” explained the online market analysts.
They noted that all countries have access to the same petroleum prices of international markets but that some had decided to impose different taxes.
“As a result the retail price of gasoline is different,” they said, noting that the same system of measurement was affecting diesel prices, with Trinidad & Tobago’s product also the lowest in the region and the ninth lowest in the world at $0.27 per litre.
Globally, the average diesel price per litre is US$0.83.
However, Haiti’s diesel sells at US$0.65; the Dominica Republic’s for US$0.68; Mexico’s at US$0.75; Jamaica’s at US$0.76 and Belize at US$0.80 compared to Barbados’s price of US$0.91.
Other countries in the region retailing diesel above the world average of US$0.83 per litre are Grenada US$1.15; Cuba US$1.20; St Vincent and the Grenadines US$0.89; St Lucia US$0.93; the Bahamas 0.94; St Kitts & Nevis $0.95; Antigua and Barbuda US$0.99; the Cayman Islands US$1.00; and the British Virgin Island US$1.19.
Meanwhile, the average price of LPG around the world is US$0.55 per litre while Barbados retails a 100lb cylinder at $152.24; a 25 lb cylinder at $43.16; the 22 lb cylinder at $38.15 and the 20 lb cylinder at $34.68.
There was no available comparison for kerosene, which now retails at 80 cents per litre, down from 95 cents.
When contacted today Minister responsible for Energy in the Office of the Prime Minister Senator Darcy Boyce refused to comment on the matter, directing Barbados TODAY to the Division of Energy and the Barbados National Oil Company Limited, but up to publication time no official response was forthcoming.
However, immediately following the announcement of lower fuel prices on February 7, some Barbados TODAY Facebook readers welcomed the decrease while others called it “a joke”, saying Barbados was late in passing on savings to consumers and the savings should be higher.
“The people have to be really stupid to be thinking they are going to benefit from a three cents per litre discount. Just think about it, if your vehicle takes 60 litres to fill up, then you save $1.80 and that isn’t even bus fare. Keep in mind that the oil prices are down from $80 to below $30, more [than] half. Look at the profit margin between [that] and your three cents per litre . . .” wrote Lawrence Griffith.
Randy Banfield (not the Managing Director of Massy Stores) further questioned the savings passed on to citizens, also pointing to the drastic reduction in oil prices on the international scene.
“Seriously, this is what you give your citizens. Since we don’t use one cents anymore, it went from $2.70 to $2.70 – lol [laugh out loud],” he said.
“The price of a barrel of oil moved from US$80 to less than US$30 which is a drop of 166.67 per cent. And this is the best Bajans can get a drop of 0.74 per cent? Just look at that – 166.67 per cent reduction in cost and Bajans get 0.74 per cent in savings – not even one per cent. This Government has no moral stance to accuse any supermarket of price gouging or unfair business practices,” concluded Banfield.
Sheldine Dyall complained that the move from Bds$2.71 to Bds$2.69 was “no decrease. Gas is selling cheap and our prices still high”.
However, Tristan John and Kevin Holder welcomed the slight price decrease, saying it was overdue and should stay low.
Also keeping watch of the situation with oil prices is the chairman of the Barbados Private Sector Association Alex McDonald. He told Barbados TODAY a number of factors were responsible for the retail prices that were set by various governments, adding that fuel prices on the international market was market driven and sensitive.
However, he acknowledged that the price of the commodity in the Caribbean and other non oil-producing nations was mostly “government driven”.
“So the government decides what the price is going to be. And in that there is an inherent flaw in the sense that every time gasoline prices go down, revenue to government goes down as well. So in an economy that is under pressure for revenue [and] is not performing well, any massive falling prices in gas and fuel will have a resultant effect on government revenues as well,” he reasoned.
“So every government tries to manipulate it to get the maximum revenue for the minimum customer dissatisfaction,” he added.
McDonald also explained that the retail price was reflective of the cost to import fuel into the island, as well as what government policy was in place.
He explained that some countries may provide higher fuel subsidies therefore they could easily see lower retail prices than Barbados’.
“So in other words, if St Vincent, St Lucia and Jamaica are saying, ‘look we are going to subsidize even cheap gas’ . . . then the gas price is even better. But if the government here is saying we are not going to subsidize [as much] and we are going to maintain the price so we can get our revenues in, that is where you are going to find the difference,” he explained.
“I think the number one issue is the willingness of Government to pass on savings as quickly as they get them. Two, the types of deals we have negotiated in terms of what are we buying the products for,” added McDonald.