Rick Lowe
Okay, the joke on the left about gas prices might not really be very funny, but a sense of humour helps in the face of rising gas prices.
On a more serious note, The Tribune quoted Mr. Hubert Ingraham, Prime Minister of The Bahamas, as saying that the government intends to protect consumers while being fair to fuel retailers as gas prices near $5 per gallon.
Beside the fact that price controls are inherently immoral, and particularly in The Bahamas where the government makes some 53% more than the combined take of the international suppliers and local retailers, it's simply not possible to please both consumers and suppliers.
On a gallon of gas that retails for $3.80 per gallon the government gets $1.18, while the wholesaler and retailer make $0.33 and $0.44 per gallon respectively.
So as the world price of gasoline increases, the governments take, or profit if you will, continues to escalate, while the retailers who have to pay more for a gallon, earn the same amount per gallon.
Free the market Mr. Ingraham and let the chips fall where they may. If one retailer tries to charge more than his competitors, he might find himself losing out to other retailers that offer a better price, but at least price controls won't be distorting the market as they do.
After more than forty centuries of price controls around the globe most nations understand that they stifle competition and ultimately create shortages and these hurt the consumer. It's time The Bahamas scraps them too.
If the government is not prepared to drop price controls in view of the increases of oil on the world market, they might consider holding the Stamp Tax charges at current levels, rather than charge the 7% on ever increasing CIF prices of imported oil.
See an interesting article by the Nassau Institute from back in 2005 here… the information there remains relevant today.
Just to let you know Rick gas in the Ottawa, Ontario area is $1.22 a ltr. or about $4.65 a us gallon.
Yes, K4C, fuel prices here are still relatively inexpensive when compared to Europe for example.
What concerns me is when businesses might be portrayed as the devil incarnate, or what is said allows that interpretation.
The Minister of Trade and Industry under the former government was particularly skilled at demonising business.
Rick at those prices we have here in Canada we are suffering a lot and we are a major oil producer, if it stays at this level, we’ll be back in another global economic recession, keep in mind the size of moving goods and services here, we are expecting a price increase for food at 5% to 7% alone this year, I can only imagine the increase you’ll have in the Bahamas. businesses is always considered the devil, but in this case it’s the greed of speculators in energy markets.
It is the greed of speculators that communicates today the quantity of future resources. Speculators cannot drive prices up and keep them up unless there is actual underlying demand for the resource.
The problem is, without price control, these big businesses (the majority of which are in some way interlinked by certain well-to-do families)can run a monopoly in this small country if they band together. These businesses also prey on the fact that Bahamians are relatively passive and would probably not intervene and just suck it up. We can not just get rid of price control until we put laws in place to prevent such things from happening, whenever that will be.