Following the unrestrained plummeting in the price for crude oil over the past seven to eight months, its plunge below US$50 on January 7—the lowest in six years—has led finally to the government, through Finance Minister Dr Ashni Singh announcing a reduction in the price of fuel on Monday. At a press briefing held at the National Communications Network studio, Minister Singh revealed that consumers purchasing fuel at the government-controlled Guyana Oil Company (GuyOil) service stations should see relief in the prices paid for gasoline, diesel and kerosene oil. That has begun to occur.
People operating vehicles of all kinds and those using kerosene as fuel for cooking and light will now be experiencing some ease on their wallets. Dr Singh did indicate in his presentation to the media that he would expect the privately-owned petrol stations to follow suit and for the providers of public transportation to pass on some of the savings to consumers/commuters.
While the other gas stations will no doubt move to drop prices soon, public transportation providers who have been in a contretemps with government and commuters over fare hikes for years are expected to baulk at reducing fares. Many have claimed time and again that they did not have the fare structure required to operate at a profit.
But the downward movement in the price of fuel extends beyond that. Full tanks for less translates to cheaper freighting of goods to market; lower cost of production for the provision of electricity and everything else that is tied to the use of power.
It would seem then from simple economics that a trickle-down effect will see reductions across the board. The question therefore is whether the average Guyanese will benefit from a concomitant decrease in the cost of food, other manufactured goods and utilities. The answer to this is another question. Have you seen a flying pig lately?
The truth is that when the price of oil goes up everything else skyrockets, but when it drops the other prices do not budge. The average citizen can therefore expect very little, if any relief from Dr Singh’s grand announcement, once providers hold true to form and the cost of food, electricity, water and transportation stagnates.
As long as there is no quid pro quo, the poorest of our poor who need the relief most will not benefit. For citizens living in dire straits in Plastic City, Skull City, Tiger Bay and other shack communities scattered around the country, the drop in the fuel price will have absolutely no impact on their lives. Those who might have a plot of land but lack the means with which to build could certainly benefit if the price of building materials took a tumble as well. But this is unlikely to occur.
Meanwhile, airlines have reduced their fuel surcharge, Caribbean Airlines did this in December last year and LIAT followed suit about a week ago.
Gold miners should be smiling as well; it was just recently that government provided them with relief after several months of complaints over the effect the drop in the price of gold was having on their operations. At the time this column was being written gold had crept back up to US$1,300 on the world market, possibly in response to oil’s decline. This should set the scene for some recovery if it holds or continues to climb.
Meantime, according to international market pundits, oil is expected to remain at a low price for at least the next two years to five years. Some are predicting that after that period the sky won’t even be the limit for the earth’s fossilized black gold; the omen being that cost of living will follow suit. These are warnings that should be taken seriously and where possible the harnessing of renewable energy should be pursued. It is worth repeating here that Guyana has year-round sunshine and yet solar energy is used only by a very small fraction of the population. There is no leadership in this instance, which lends incongruity to government’s claimed pursuit of low carbon development. Instead, one can travel to temperate countries and find solar power being used in public projects such as street and traffic lights. The current situation offers a short time span within which we can get our act together. However, this calls for leadership, which like the price of oil has also been in decline.