Fuel prices tumble again at local pumps

Prime Minister Dr Ralph Gonsalves has defended this country’s policy in setting the retail price of fuel, as he announced the fourth reduction in prices at the pumps in five months.{{more}}

Fuel prices in St Vincent now stand at the lowest they have been in two years, when gasoline was $9.50 per gallon in January 2006.

The 24,000 or so motor vehicle owners can now breathe a collective sigh of relief, as gasoline, diesel, and kerosene now stand at $9.70, $9.60, and $9.85 per gallon, respectively, from $11.73, $11.50, and $12.55 per gallon, respectively.

Referring to the government’s policy of adjusting the fuel prices, based on a rolling three-month average, Dr Gonsalves said that it was necessary to “iron out any fluctuation in the prices when they go up or down.”

The Prime Minister said with this system government is able to ensure that there is a “sense of price stability as far as it is practicable.”

He said that the system receives criticisms when the price of fuel is going down, but “people like the three month rolling average when prices are rising sharply.”

He credits this system for keeping the price of gasoline below $16 per gallon here, while comparatively in Dominica, where the price is automatically passed on to the consumer, the price of gasoline went upwards of $18 in one instance.

When crude oil prices peaked on July 11, 2008, to $147.27, many feared that the upward trend would have continued all the way to $200 per barrel.

However, the uncertain global economic outlook has prompted the Organization of Petroleum Exporting Countries (OPEC) to revise downward their forecast of the global oil demand, which analysts believe have driven down the price.

“Everyone is coming to terms with the fact that the global recession is reducing demand for oil,” an Energy analyst said in a CNNMoney.com special report. (KJ)