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SLP, UWP In Gas Price ‘War’ – Gov’t To Announce New Rates Monday

AHEAD of new prices for fuel to be announced on Monday, government and opposition traded words this week on the issue.

The bone of contention is the fact that St Lucia’s rates for fuel products have remained high while world prices for oil have drastically been reduced in recent months.

A number of citizens have also been voicing their concern about the high prices on talk shows and social media.

It all started after the United Workers Party leader Allen Chastanet called on the government to reduce fuel prices, accusing it of making $6.80 on every gallon of gasoline sold here. The government claimed that Chastanet did not understand how petrol prices at the pump were calculated in Saint Lucia.

Chastanet indicated that the government was benefitting handsomely from the surplus funds earned as a result of the over 50 percent decline in world crude oil prices over the last six months, while prices at the pump had remained unchanged.

Said a statement from acting Press Secretary Terry Finisterre : “The Government of Saint Lucia uses a throughput calculation system where the excise taxes imposed by government are adjusted. This is done every three months. This means that regardless of the price of petrol on the world market the government revenue per gallon does not change during this three month period. Any benefit in a decline of price during the three month period is absorbed by the petrol retailers. The converse would occur if world market price of oil were to increase during a given three month period”.

According to the statement from October 2014, government excise tax on petrol has been EC$2.48 and government earned no extra money when the price dropped as the excise tax was fixed.

“Government intends at the next review on January 12, 2015, to ensure that a substantial part of the benefit which retailers enjoy now with lower prices will be passed on to consumers”, it added, referring Chastanet’s $6.80 claim as “nonsensical”.

But the UWP leader hit back arguing that the government had found itself unable to defend its policies – on the gas prices issue. He quoted the government’s press release as saying that “government’s revenue does not change and any benefit is absorbed by the petrol retailers”.

But Chastanet added that the Petroleum Dealers Association had categorically denied that its members benefitted from any such arrangement and stated emphatically that they only received $1.05 per gallon as prescribed by government through the “Distribution and Goods Act” of 2006 which regulates their profit margins under this gas pass-through mechanism. The same was also true for the distributors whose profit was also regulated by the same Act, Chastanet added.

He added: “ At the end of each three-month period when the accounts are reconciled, there is a clear surplus and more so over the last six months. The question must be asked as to why in this environment our government seeks to benefit from this massive surplus at the expense of the citizens and businesses of Saint Lucia? It is clear that this government does not understand that lower gas.
prices, as in the United States EC$5.40 a gallon or St. Kitts at EC$10.75 a gallon, as compared to EC$ 15.80 in Saint Lucia, will provide a major stimulus to our economy and provide urgently needed relief to the well-being of our people.

“Both in the United States and in St. Kitts where gas prices have been reduced on a regular basis, we have seen a boost to their economies as a result. By contrast in St. Lucia where gas prices have not been reduced on a timely basis, ours is the only economy to contract three years in a row, our unemployment numbers continue to rise dramatically, we continue to suffer from an unsustainable increase in the cost of living and we have witnessed a record number of business closures”.

The UWP leader said it was now manifestly clear that it was a catastrophic mistake on the part of the government to change the pass-through mechanism assessment period from one month as was the policy of the UWP administration to three months. The “lack of transparency” of the current formula was also a major cause for concern not just to the United Workers Party and to the island’s petroleum dealers but to all consumers, he said.

Added Chastanet: “We clearly now know that the pass through mechanism was not designed to allow any third party to benefit from any surplus. We must ask ourselves the question why did this government really change the pass-through mechanism and why have they chosen not to tell the truth? Is it that they know they are benefitting from the surplus and did not care about the negative impact it was having on the economy and the livelihood of families or is it that they are so incompetent that they really did not know that they were benefitting?”

He accused the government of continuing to “destroy our country and to impose unnecessary hardships on all St. Lucians by the imposition of reckless policies and complete mismanagement of our economy.” Chastanet added: “The Prime Minister must now realize the future of our country is in his hands and at some point he must start doing the right thing”

The UWP called on the Prime Minister to: immediately drop price of gasolene to $10.75 a gallon or less; ensure that bus fares did not increase at the end of this month and work with LUCELEC to urgently address the unchanged cost of electricity which should have been reduced given the dramatic drop in world oil prices.

Meanwhile, St Lucians are looking to Monday to see how far the prices of gasolene and other petroleum products will come down.

5 Comments

  1. The latest price of gas today US $1.85/gal. What will the price be in St. Lucia on Monday? Let’s wait and see!

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