Come next Monday, Vincentians will have to pay more for gasoline and diesel at the pumps, as Prime Minister Dr. Ralph Gonsalves has announced a 75-cent hike.
This announcement was made via radio Monday, and comes, according to the Prime Minister, in the wake of rises in fuel prices internationally.{{more}}
Dr. Gonsalves said that from the end of December Brent Crude has been between US$30 to $40 per barrel and over $35 since May. He said that although the Organization of Petroleum Exporting Countries (OPEC) had agreed to increase production by two million barrels a day in order to stem escalating prices there had only been a marginal decrease since then.
The Prime Minister explained the main concerns of petroleum increases for importing countries. These were the “microecomomic impacts” on government revenues, transportation costs, cost of production and the cost of generating energy and the “macroeconomic impacts” which refer to the indirect effect on wage and price levels, economic growth, inflation and the balance of payments.
He sought to explain that “the current increase has direct implications for the performance of the public revenue via the Bonus Malus system” which has been used by government to cushion fluctuating worldwide prices by stabilizing prices at the pump. The Bonus Malus system, he said, has accounted over the last two years for an average of 30 percent petroleum related revenues. The revenues generated, he explained, contributed to the “overall strength of Government’s fiscal position” during 2003. He claimed that it was as a result of this that this country was able to maintain a surplus on the current account” during a period when many other governments recorded deficits.
The Prime Minister pointed out that the price increase would impact on electricity which will be passed onto the consumer via VINLEC’s fuel surcharge mechanism.