St Lucia government denies rumour of fuel price increase

CASTRIES, St. Lucia, Thursday October 31, 2013, CMC – The St. Lucia government has denied reports that it is moving to increase fuel prices at a time when the global price for the commodity is on the decrease.

A statement issued by the Office of the Prime Minister said that there had been suggestions, “some of it misguided” that the press release issued on Monday announcing new fuel prices for the period October 28 to January 20, 2014 was aimed at “collecting revenue at the expense of the poor people of St. Lucia”.

The government said that the changes in fuel prices in recent times reflect developments in international oil prices over the past three months.

It said that international crude oil prices, measured by the West Texas Intermediate (WTI) benchmark price averaged US$96.1 per barrel for the period January to September 30, 2013, compared to US$94.9 for the same period in 2012.

The Kenny Anthony administration said that the recent upsurge in oil prices has been influenced by geopolitical tensions in the Middle East, heightened by the situation in Syria.

“Nonetheless, the US’ weak economic recovery and the partial government shutdown coupled with increased supply from Saudi Arabia and Non-OPEC oil producers placed downward pressure on prices in late September 2013”

The government said that during the period July 22 to October 11, 2013, WTI prices averaged US$106.24 per barrel as compared to the previous adjustment period which averaged US$97.34 per barrel;

“These developments have contributed to an average increase of 6.7 per cent to the CIF on imported petroleum products into St. Lucia. However, the increase to the consumer for gasoline and diesel was only 2.6 per cent and 2.3 per cent respectively.”

The government said that the cost sharing mechanism it has implemented would lead to a further four million EC dollars (One EC dollar =US$0.37 cents) in revenue forgone.

“That, added to the revenue shortfall of over three million EC dollars based on budget projects from April to October 2013, cannot be a happy situation for the Government.”

It said that the lower the cost of international oil prices, the lower the cost of bringing these products into St. Lucia, the better for the government, “as there would be no need for such a high subsidy on the 20 pound LPG, (Liquefied Petroleum Gas)  and further, there would be no need to further compromise the fiscal situation by reducing the excise tax on fuel”.

The St. Lucia government said while international oil prices had decreased by an average 3.2 per cent during the period April 29 to July 28, this year to US$94.67, the turmoil influenced by concerns about potential supply disruptions due to the political turmoil in Egypt, forced the prices to increase to U$105.52 per barrel on July 10.

“Despite this, there was a reduction in fuel prices on July 29, 2013. Unleaded gasoline reduced by ten cents ($0.10) per gallon. Diesel was reduced by fifty cents ($0.50) per gallon. Kerosene was also reduced by one dollar ninety two cents ($1.92) and the twenty pound LPG was reduced by one dollar and twenty five cents ($1.25), notwithstanding a government subsidy of seventeen dollars and ninety five cents;

“What this demonstrates, is that the price adjustments takes into account the movement over the three month period of purchasing and is not a reflection of what is happening on the international market on the day the adjustment is made in St. Lucia;

“Therefore, if the cost of importing fuel from July to October decreases, when the prices are adjusted in October there will be a decrease.

But the government warned “by the end of October, there may be factors which would cause the price of crude oil to increase sharply, but that would be reflected in the following period, as no petroleum products would have been imported to St. Lucia at the time of adjustment, at the increased cost. Click here to receive free news bulletins via email from Caribbean360. (View sample)