War of words over Oil Prices

As prices of oil plummeted on the world market, hitting just below US$50 a barrel this week (the lowest since 2009) there has been much debate in Saint Lucia over the high costs of fuel here. This, as the prices have dropped on the international market and in some Caribbean territories, resulting in some savings for consumers.However, the government of Saint Lucia has announced that in keeping with its pass through mechanism, where prices are adjusted every three months, the next price change will take effect on Monday January 12, 2015.

Ahead of that change, leader of the United Workers Party (UWP) Allen Chastanet on Monday called on the Kenny Anthony administration to reduce the price for local fuel immediately, so as to bring some relief to the country. He went on to note that the high cost of fuel was having a negative impact on the Saint Lucian economy adding that government was making an estimated EC$6.80 on every gallon of gas being sold on the island. The leader of the UWP also recommended that the price of fuel be adjusted in the range of EC$10.00. The price presently stands at EC$16.30.

Following the statements of the leader of the opposition UWP on Monday, the Saint Lucia Labour Party shot back Tuesday with a press release of its own. In it the SLP explained that the government of Saint Lucia “uses a throughput calculation system where the excise taxes imposed by Government are adjusted.

“Any benefit in a decline of price during the three month period is absorbed by the petrol retailers. The converse would occur if world market price of oil were to increase during a given three month period,” the statement read. Further, from October 2014, Government excise tax on petrol has been EC$2.48 and Government earns no extra money when the price drops as the excise tax is fixed.

“Government intends at the next review on January 12, 2015 to ensure that a substantial part of the benefit which retailers enjoy now with lower prices will be passed on to consumers,” the SLP statement added.

This week one petroleum dealer and former Senator Everestus Jn Marie told the media that both the SLP statement and the leader of the opposition were wrong on different counts. He noted that the margin that both government and the dealers receive is fixed and that contrary to pronouncements the retailers’ profit margin was not higher even as prices on the world market fell.

Jn Marie also debunked Chastanet’s claims that government was now bagging in excess of EC$6.00 since that too was fixed and government had been receiving just over EC$2.00 in taxes on fuel. 

A local chartered accountant, Richard Peterkin this week also weighed in on the discussion and has called on the government to explain to the citizenry how the “pass through” mechanism is calculated to avoid any further confusion.

The discussion on oil prices was also centered around mini bus operators this week who are still pressing for a hike in bus fares, even if the price of fuel at the pumps drops.