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Sep 28, 2017

Fuel Prices Going Down “Soon, Soon”

As fuel prices skyrocket, the government is sticking to its guns that its share of taxes is not responsible for the steady increases in prices and is promising a reduction in the coming weeks though by how much is unclear.  The Chamber of Commerce in its statement released on Wednesday, pointed to prices for premium at eleven dollars and ninety-two cents as representing at least ten percent greater bite in taxes though the landed cost was twenty percent higher in 2014, when the price was eleven dollars and sixty cents, and that even later tax rates would produce lower prices. Prime Minister Dean Barrow once again pointed to the temporary irregularity in supply under the Petrocaribe Program and also limitation in supply from alternate sources due to the effects from Hurricane Harvey and said both are being addressed.

 

Dean Barrow

Prime Minister Dean Barrow

“The increases have not come about as a consequence of Government’s raising Government’s tax share of the structure, of the equation that results ultimately in the pump price – we have done nothing. It is that the acquisition costs have become dearer, and they have become dearer not so much in consequence of the market movements, but as a result of two things: the hurricane in Texas, which caused prices to go up all across the board – but we know that by the next shipment, that would have righted itself; and the second reason is, I have explained more than once before, precisely because of the instability of the supply that we were getting from Venezuela. What would happen is that at very last minute, we would be told the amount that you ordered, Venezuela can’t find; it caused, then, the importer to have to scramble to make last-minute purchases to make up the significant shortfalls. The last-minute purchases are at a higher rate than if you plan and you place your volume orders well in advance; the last-minute purchases also meant that you had to, as well, put in place transportation arrangements that you would not have, in fact, agreed at the time you initially placed the order, because you didn’t know that Venezuela would not be able to fulfill the order. The Venezuelans have made it absolutely clear that come hell or high water, they will supply what we order, so there will not be that factor of having to scramble at the last minute to go buy on the spot market at the higher cost. That’s number one. Number two, the temporary problem, the hiccup caused by the hurricane, would have righted itself.”

 

P.M. Barrow added that if the reduction does not come through, then Government would lessen the tax bite until matters can be rebalanced.

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