Gas Increases uncontrollable- Government Playing No Part in Recent Spike at the Pumps Print E-mail
( 2 Votes )
Written by Shane D. Williams   
Thursday, 01 March 2012 00:00

GasOn Monday, February 27, 2012, we saw the end of a painful seven day stretch in which the price of oil increased daily on the international markets. There are many factors that impact the price of oil. Experts are pointing to the Iranian nuke crisis as the reason for this recent spike. Analysts say a standoff between the Western world and Iran over its nuclear program continues to keep oil prices high. Western nations have been trying to get international inspectors into Iran’s facilities because of the fear that Iran is building a nuclear weapon.  Iran continues to deny the claim and has threatened to disrupt oil supplies if action is taken against them. As a result, oil prices are at a 9 month high finishing at over US9 per barrel last week. This has caused prices at the pump to increase across the world and as a country that imports gas, Belize is feeling the brunt of the increase. Since the price of gas has increased, the cost of getting the gas here has increased as well. It’s a double blitz that has been passed on to consumers.

The government of Belize has no control over world oil prices and little control on prices at our local pumps. However, Prime Minister Barrow has already taken steps to ease the burden on Belizeans by eliminating GST on gasoline, kerosene and diesel. Instead of GST, a fixed Import Duty was implemented. Government’s take at the pumps has not increased since the international oil price was at US$85 a barrel. In March of 2011, Prime Minister Barrow challenged the gas importers to implement a similar fixed take. They have not done so and therefore, they have benefited greatly from the increases over the past year.

There seems to be no ease in the near future and because of that, PM Barrow is already making plans to tackle pump prices. One of the first things that the next UDP government will do after elections is to invest in a national oil refinery. PM Barrow has already engaged the conversation and the initial projection is that it will take eighteen months to construct. Government will purchase oil from local producers and refine the product. The price will be far cheaper since Belize will no longer need to import the product. However, eighteen months is a long time to wait. In an effort to bring relief sooner, the government will identify locations for fuel storage tanks. Those tanks will be used to store fuel imported from Venezuela. It is likely that the Venezuelan government will sell Belize fuel at a subsidized rate. It will not be enough to supply the whole country but the fuel will supply all government vehicles. The savings that is experienced as a result will be passed on to Belizeans in the form of tax relief at the pumps.

Belizeans have been suggesting that government invest in a refinery for a couple years now and government has been exploring the option. One argument against the idea was that a refinery would only be profitable in the long term if we have a long term supply of local oil. There are a few organizations that are spending hundreds of thousands (maybe even millions) of dollars to see that there is no more oil exploration. They definitely do not have the interest of the Belizean people at heart. Investment in a refinery is based on the belief that there will be more oil discovered in Belize and it will be enough to supply the entire country and relieve us from the dependence on foreign fuel.    

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