World Oil Prices Fuel Regional Concern
|
World Oil Prices Fuel Regional Concern |
|
Contact: Earl Bousquet Concern continues to mount at home and abroad regarding the seemingly endless increase in the world market price for oil and the resulting hardships for non-oil producing countries. The war in Iraq, rapid economic growth in China and other Asian countries, the reluctance of the OPEC cartel to increase production and the increasing armed attacks in Saudi Arabia have combined to send the price of oil skyrocketing to US$41 per barrel – the highest it has ever been since the oil crisis of 1974. This record price represents a 41% increase over what a barrel of crude cost one year ago in May 2003 and 51% over the price two years ago. St. Lucia and other Caribbean countries have been keeping their eyes on the world oil market and fears have been expressed across the region that if prices continue to spiral at current rates, governments will have to urgently review the pricing mechanisms in the various territories. Even in advance of the latest price increases on the world market, some Caribbean countries had already increased the cost of petrol at the gas pumps. The Dominica Government increased the price per gallon of gas to EC$8.49 in April, the third such increase in six years and the second in four months. In Barbados, where a gallon of gas already costs $9.10, the government says it has no choice but to increase energy prices again. Jamaica has also announced an intended increase and so has Guyana. The Heads of Government of the OECS member-states at their 39th Summit last month in St. Vincent & the Grenadines noted that any continuing increase in the price of oil on the world market “would have serious consequences for economic recovery in the various islands and seriously impair their capacity to compete effectively in the international marketplace.” Prime Minister Dr Kenny D. Anthony, the Chairman of the OECS Authority, indicated after the St. Vincent summit that with prices hitting a 30-year high in the USA and increases of over 20% in Cuba, “the impending crisis could become one of international dimensions.” The pricing mechanism employed by the Government of St. Lucia over the years to cushion prices at the pumps has resulted in a serious drain on the collection of Consumption Taxes by the Treasury. With local prices remaining fixed at the gas pumps at $7.75 per gallon, revenue not collected by the government of St. Lucia amounted to over $4.1 million at the end of March 2004. Worse, the government has actually had to face a “Negative Tax” position whereby it has had to forego even more than normal in order to meet the cost of guaranteeing dealers their basic profit margins. But even as all eyes remain focussed on the world market prices for oil, there is some acceptance locally that government may have no alternative but to review or readjust the pricing mechanism. President of the local Petroleum Dealers Association Evaristus Jn Marie indicated on Tuesday that given world trends, a price increase was inevitable. Mr Jn Marie however called on the government to make it an incremental increase so as to cushion the effect on motorists. He said “a gradual increase” would most likely obviate the need or temptation for minibus drivers to pass the increases on to commuters and other consumers. With forecasts that the current trend of skyrocketing oil prices may continue until August, governments across the region stand to continue to lose revenue until and unless the review or adjust retail prices. Meanwhile, Saudi Arabia, which has been coming under increasing world pressure to increase oil production, has agreed to do so, while the OPEC group will meet in Beirut tomorrow under equal pressure to boost production limits to help top world inventories. Prime Minister Anthony said recently that “the OPEC countries need to understand the serious damage that’s being done to the economies of developing, non-oil producing countries.” He said if the situation continued it would seriously compromise their efforts towards economic recovery. Dr Anthony said the government of St. Lucia would continue to monitor the world market price, but it would at the same time also “continue to advocate fuel efficiency and conservation, as well as continue the search for alternative energy sources.” June 2, 2002 |
|
© 2004 Government Information Service. All rights reserved. Read our privacy guidelines. |
