Government does not intend to take any action to ensure that consumers benefit from the fall in oil prices but rather is hoping that the ‘market’ would act in this regard.
“Government is hoping that the ‘market’ will work adequately and government would not need to intervene,” Prime Minister Samuel Hinds told Stabroek News when asked whether government is going to take any action to ensure that consumers benefit from the fall in oil prices. As it relates to costs in the transportation sector, he said that it is too early to say. “There are many considerations, many contributions, and again one would hope, firstly, that the ‘market’ would act adequately,” the Prime Minister said.
Last November, as oil prices dropped, government had increased the excise tax on fuel. “Government has in place a long-standing and well-functioning mechanism under which the ad valorem tax rate on fuel products is adjusted downwards when the world market price for fuel moves upwards, and vice versa; it adjusts upwards when the world market price for fuel moves downwards,” the Ministry of Finance had said in a statement.
Notwithstanding this, last week Minister of Natural Resources and the Environment Robert Persaud announced that government has granted a 10% reduction in the tax for diesel fuel imported for use in the mining sector, among other concessions to the sector.
Last week, Reuters reported that global oil prices have dropped by nearly 60 per cent since June as production around the world has soared, outstripping demand at a time of lackluster global economic growth. It is expected that there will be an increasing global surplus of oil in 2015. The global benchmark Brent crude was at US$50.17 per barrel yesterday according to Bloomberg. In June, Brent crude oil traded above $115 a barrel and U.S. crude above $107.
Despite the global drop in prices, not much has changed in Guyana. A visit to several gas stations yesterday revealed minimal drops in price or not at all. At GuyOil on Regent Street, the price was $218.9 and $216.7 for a litre of gasoline and diesel respectively. The supervisor on duty said that this has not changed since last year and management has not indicated whether there would be any changes soon.
At the Shell service station on Regent Street, the price was $219.9 and $217 for a litre of gasoline and diesel respectively. Stabroek News was told that the price had dropped slightly at the beginning of the year. At the Rubis gas station on Vlissengen Road, the price was $222.9 and $218.9 for a litre of gasoline and diesel respectively. This was a drop from $237.9 and $221 for a litre of gasoline and diesel respectively last year, this newspaper was told. The supervisor on duty said that the price is set based on the price at which the fuel is purchased.
There have been calls for government to ensure that the falling oil prices redound to the benefit of consumers.
Georgetown Chamber of Commerce and Industry (GCCI) executive member Clinton Urling told Stabroek News yesterday that when prices were high, people were paying and now, when it is low, it is only fair that the prices reflect this drop.
Urling suggested that government should reduce fuel prices, especially in the electricity and transportation sectors. The money saved by consumers could go elsewhere to help the economy, he said, while adding that the economy is sluggish and the savings could give it a jump start. Speaking from a businessman’s perspective, he said that “it is very much needed” and further argued that it would make sense to reduce the cost of fuel locally. “Right now something has to happen,” he said.
Last week, other private sector officials also said that consumers are yet to benefit from the fall in the price of oil. “Guyanese are still to feel the positive effects of falling oil prices in their pockets. Electricity, transport and manufacturing costs, particularly, ought to come down on account of oil prices. Ideally, falling oil prices ought to have helped offset the negative effects of the lower gold prices,” GCCI President Lance Hinds had told Stabroek Business.
However, given the Prime Minister’s comments to Stabroek News, there is no plan for now by government to ensure that consumers benefit from the fall in oil prices.
