While the price of oil has fallen to US$46 a barrel, down from US$115 per barrel last June, Vincentians were on Wednesday paying some US$4.48 per gallon of gasoline and some US$4.78 per gallon of diesel at the pumps.
The price per gallon of gasoline at the pump was EC$12.72, down from EC$15.28 last August, a reduction of EC$2.56.
The price of diesel at the pump is EC$12.91 per gallon.
Leader of the Opposition Arnhim Eustace asked on Monday whether the continued high price of fuel at the pump was a tax on consumers to help the government service its EC$140 million debt to Venezuela under PetroCaribe.
PetroCaribe, Venezuela’s oil initiative with some Caribbean and Latin American countries, allows participating nations to pay upfront only part of the cost of their oil imports and the balance over 25 years at 1 per cent interest, even as citizens pay the total amount at the point of purchase.
“If you (the government) are going to tell me you are going to service the loan by not passing on the increasing oil price to you (the consumer), tell me so,” Eustace said on his weekly radio programme.
He said that the Ralph Gonsalves administration does not include in the National Debt most of the monies owed to PetroCaribe.
“Some countries have it fully in their national debt, or have mechanisms, which allow them to make their payments.
“I want to know what the government of St. Vincent is going to do about that. And I think the people of St. Vincent and Grenadines, … if they are going to make a sacrifice by not having lower oil prices, and lower fuel surcharge in order to pay back the debt, tell the people of St. Vincent and the Grenadines that. Don’t hide it in a corner. It can’t hide, because it has to be paid,” Eustace said.
Eustace, an economist, noted the importance of fuel to the economy, saying, “Oil, in a sense, is all embracing.”
He said fuel is needed for any business or home, whether through electricity, fuel for vehicles or equipment.
“So, it is not just that you go to the gas station and you buy some fuel and you get a lower price,” Eustace said, adding that when businesses pay less for fuel, they can produce products cheaper and become more competitive, which also can help with exports.
Eustace further said that lower energy cost can cause prices at supermarkets to fall, adding that there are supermarkets in St. Vincent and the Grenadines that spend up to EC$2 million annually on electricity.
“You know when the fuel surcharge drops significantly, people feel the impact immediately. It gives them a little more money in their hand, which otherwise would have been consumed by paying for the fuel surcharge,” he said.
“And we need to go the maximum that we can, but we have a problem here. We have a problem in St. Vincent that government needs more money to carry out the programmes it needs to do. And therefore, it is slower than some other countries in reducing the price of fuel, for whatever purpose, and therefore, our consumers continue to pay a higher price than they should.”
Eustace said he is also concerned about the fuel that SVG gets from Venezuela under PetroCaribe, adding that he has repeatedly said that the country has to be very careful how it deals with PetroCaribe.
“One hundred and forty million is not penny. It is large and it has to be repaid, and the bulk of it is not seen in the national debt,” he said of the monies owed to Venezuela as a result of PetroCaribe.
He noted that under the PetroCaribe agreement, with the price of fuel on the world market now below US$50 a barrel, the government will have to pay Venezuela the full cost of the oil it buys.
“How are you going to pay for the debt that has gone already if nothing more is coming in? It means you still have to go back to the same national debt, to the same taxpayers, to pay that loan, because you are no longer getting this money in advance that you can keep.
“In addition to that, all of us know that the economy of Venezuela is in deep trouble,” Eustace said, noting that Caracas is trying to sell some of the PetroCaribe debt to private sector entities.
Eustace further said that observers have said that the price of oil is likely to remain low as Saudi Arabia has said it has no interest in reducing production, thereby driving prices up.
“… our governments have to follow these developments carefully and determine what policies we should follow. We must understand what the international community is doing and how it impacts on us, and, therefore, what should we do about it, what policies we should develop in relation to it,” he said.
“How then are we going to look after our debt to PetroCaribe? How then are we going to look at the prices of oil to our consumers, the price of oil to our businesses and the impact on employment and so forth?
“It’s a very serious issue, I hear no comment from the government but it is going to impact us. It is impacting us already. What steps are we prepared to take to deal with this matter? You are not hearing a word, but it is happening already…” he said.
Eustace questioned whether the government is going to increase taxes or cut spending in some areas to service the PetroCaribe loan.
“What are you going to do as a government to deal with this issue?” he said.
“It’s a fundamental issue. Recognising that Venezuela, while they have helped and have been generous in terms of the loan, the loan is no longer available. That is the reality.”
He said these issues must be addressed now, and there must be a clear policy approach.
“Maybe that is what they are afraid to talk about. Because, if you give people that benefit, you still have to deal with paying back the loan. … All that talk about we dealing with a rolling average over three months and so on, I understand that. All I want to hear from the government of St. Vincent, I want to see what PetroCaribe funds are available from the loan we had in the past and how we are going to service the loan.
“And what happens if our debt was sold by Venezuela? The people who buy it will want their money right away on the terms they have already agreed to,” Eustace said.