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Contact:
John Emmanuel
Wednesday, April 20, 2005 - With fuel prices on the island remaining
unchanged, St. Lucians are being urged to reflect on the important issues of
energy and conservation during this period of sustained high oil prices. Prime
Minister and Minister for Finance, International Financial Services and
Information Honourable Dr. Kenny Anthony, says however adjustments in the price
of fuel will be inevitable if prices continue to rise on the world market.
As part of his 2005/06 Budget presentation, Dr. Anthony underscored the
volatility of fuel prices. Since the last adjustment in fuel prices on the
island in June of 2004, international prices have increased from US$26 per
barrel in 2002 to a peak of US$58 per barrel in April, 2005, representing a 40%
overall increase.
Much of that increase Dr. Anthony attributed to strong global demand from the
United States and more particularly, the expanding economies of China and India.
This upward spiral of international petroleum continues to have a negative
effect on revenues of the country. St. Lucia recorded corresponding reductions
in the average consumption tax revenues for diesel and unleaded gasoline.
Revenue generated from the two commodities fell by 9.5% in 2003 and in spite of
price adjustments, fell by 23% in 2004. “Since July 2004, Kerosene and Liquid
Petroleum Gas (LPG) have also generated negative consumption taxes,” said Dr.
Anthony.
According to Dr. Anthony, “This has resulted in a situation where the Government
of Saint. Lucia has granted funds to importers of those products. With the
increase in prices beyond US$49, the negative amounts for kerosene in particular
have become so large that they have led to a complete erosion of the suppliers’
margin. This of course has raised concerns from the suppliers as it is no longer
profitable from a business point of view to import the commodity. In effect, the
Government is now paying suppliers to provide these products to consumers.”
With analysts forecasting prices will stay high for years to come and reaching
possibly an all time high of US$100 per barrel, Dr. Anthony reiterated the need
for continuous monitoring of global trends.
In a bid to assist energy conscious consumers, government, for the second time,
will reduce consumption taxes on energy saving devices. Effective August 1, 2005
and until income year 2007, government will allow the deduction of expenses
incurred by a tax payer purchasing and installing a new solar water heating
system, up to a limit of $6,500.
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