Gas price cuts need to trickle down
(CNS): Activists who are pressing government to act on gas price regulation are also keen to ensure that any cut in fuel prices trickles down into the community. Whether it is as a result of transparency and regulation or the suppliers finally reflecting the fall in world prices at the pump, any significant drop in fuel costs should also pave the way for wholesalers and in turn retailers to cut all prices to consumers.
But George Ebanks, the chair of the group petitioning for fuel sector regulation and price cuts, said government could not ignore the need to ensure their efforts to cut the cost of gas spreads across the economy.
He said that once Cayman achieves the goal of cheaper gas, the savings need to be passed on to consumers everywhere, from supermarket prices to air fares, as the cost of fuel has often been justified by the commercial sector for the high cost of living across the board in Cayman. Ebanks said that as government drafts the legislation to regulate fuel pump prices, it needs to consider the bigger picture and seek ways to ensure the necessary trickle down.
“The committee is concerned … about ensuring that once these forward-looking and potentially effective pieces of legislation are passed into law and they result in the fall of our local gas prices, that cost savings can be passed on to the ordinary consumer by way of reduced prices at our supermarkets and all other users of fuel energy,” Ebanks said.
“Indeed, the committee is of the firm opinion that unless some effective mechanisms are put in place, possibly by other legislative amendments and from other ministries, that this opportunity to have achieved cost reduction across the board on our too high and often complained about cost of living will have been wasted,” he added.
Given the ongoing issue of how the price of fuel in Cayman is so much higher than in the US, where much of it is purchased, and the mystery of why there is barely a change at the local pumps for months when global fuel prices fall but prices increase are reflected almost immediately, government has been focused on addressing this issue.
Planning Minister Kurt Tibbetts, who has responsibility for the Petroleum Inspectorate, has made a number of statements regarding efforts to talk with the bulk fuel importers and to get them to lift the lid on how their prices work. In his latest statement in the Legislative Assembly in August, Tibbetts said that unless the two fuel importers, Rubis and Sol, became more transparent and fair about pricing, the government would introduce price controls.
The cost of fuel considered one of the main contributors to the cost of living because of its direct impact on transport costs and the price of power and indirect impact on all prices. However, if government manages to drive down the cost but that is not reflected throughout the economy, it will only have succeeded in boosting merchants’ profits and will not have addressed the real economic hardship of the regular man on the street
While mla bodden owns a gas station, nothing will happen.
Before you start regulating, you need to get the figures so that you can tell what needs to be done. This may be nothing more than a plain old-fashioned price-fixing cartel between the two oil companies. If so, what you need is a competition law banning pricing and market share discussions and collusion by the companies, rather than price controls.
This is a real issue that must happen in tandem with real fuel prices being reduced. I would trust that the merchants would know that they too are vital stakeholders in the preserving the social fabric of our society.
I myself, would hate to see real price reductions at our fuel pumps but my CUC and my gallon of milk remaining the same. Not to mention my Cayman Air tickets.
This will be a time for all business to discover their individual corporate conscience.
I pray to God that they will.
George, Please do not forget the price of water.. Essential services should always be protected, reason developed nations have Consumer Protection Agencies.. Government need to have continuities in place to ie: contract for alternative fuel supply in the event someone tries to play hard ball.. Our national interest should never be in the position of being ransomed. National interest, someone need to take that term serious..
If you looked up ” waste of space ” in a good dictionary, there would be a photo of Kurt Tibbetts. He waffles, prevaricates, and procrastinates on every issue within his Portfolio where he should be taking action. It is difficult to understand how he has the cojones to monthly accept the huge salary payment he receives as a government Minister, for doing absolutely nothing – he is the the only MLA who is as ineffectual as Capt. ( excuse the laughter ) Eugene Ebanks. I have rarely agreed with George Ebanks but, this time he has got it right.
Unfortunately with Kurt at the helm to sort this out, it will never happen.He moves at a snails pace and is full of hot air with no conviction. Elections are coming up and they are not going to mess with their highest contributors.
Give all politicians a term limit of two terms and we might get something done. These guys want to be career politicians and stay in office double-dipping salary and pensions until they are too old to run anymore. It makes me sick to my stomach.
Wish we could get some real men and women like we used to have that were for love of country and not for how much money and benefits they could have. Men and women who did the right thing rather than the thing that would get them re-elected.
All said and done I am cautiously optimistic that these guys will look past their personal gain and re-election goals and do the right thing for Cayman. Gas has fallen below $2 in most states in the USA. We could go to the States, buy it retail, pay freight and duty and still save significantly…It has to stop.. We need something done now….
Kurt wouldn’t know his arse from his elbow in trying to bring the two fuel companies to some sort of accountability over their pricing systems. For decades, whichever were the two companies importing fuel, have screwed the Caymanian public without the decency of at least first giving them a kiss.
That last two sentences says it all, Sol and Rubis have been raping us for years, it is so obvious to me, I almost have to believe that there is someone in our goverment benefiting from this arrangement.
Someone needs to test this with a law suite.
Regarding Supermarkets…the price of gasoline has little to do with grocery prices. The current duty system whereby supermarkets must pay full “tax in advance” of any sales, on all imports is the reason for relatively high prices. Publix in Miami for instance, does not pay a penny of tax in advance, and when they do pay it is on profits only. The inevitable spoilage and waste is written off as an expense. The multiplier effect of the “tax in advance” system is astronomical on a perishables business such as a supermarket.
You are very wrong @2:16pm. The price of gasoline does have an impact on supermarket grocery prices. Consider;
All businesses include in their unit pricing structure an accounting principle called “indirect costs”; this would include its average overheads.
Overheads would include lights. Lights and other electrical equipment would use power to provide its energy.
That energy is; in our Caymanian context, comprised of gasoline and diesel oil.
So, I submit to you, in humility, that YES a reduction in our fuel energy WILL CAUSE (MUST CAUSE!) a fall in our supermarket goods; our utility bills; our airline tickets, our trucking services cost and of course our individual gasoline daily cost.
So @ 2:16pm…a “win-win” for ALL OF US (which includes YOU).
Can we charter a barge from Ecuador at 44 U.S. cents a liter or $1.60 CI a gallon? Throw another 50 cents per gallon for transportation and another 50 cents per gallon as compensation to our beloved CIG for sorting this issue out for us and we can pay 2.60 CI per gallon for a long time.
For our consumption we would probably need a couple of barges each year. On another note just bring one barge and see the gas companies drop their prices ASAP. Every time they raise prices, we charter another barge.
Problem solved. See link.
http://www.globalpetrolprices.com/gasoline_prices/
a few operators on island bring in their fuel for there trucks already
they are much smarter than others and that is why they are better
I love this idea @Rp! Might be something that a George Ebanks Administration would implement to further reduce our cost of living.
Just thinking out loud…..smile.
A review also needs to be done about the matter of duty-free luxury items, as I understand (but stand to be corrected) that items like perfume, watches and other items sold by the wealthy store owners along the waterfront and elsewhere are duty-free. Why not charge duty on all luxury items, which can be labeled as “wants” and reduce the duties on food imports, which are necessities? Our costs of food are ever-increasing, never mind any cuts in fuel costs! The long-established supermarket owners are millionaires, possibly billionaires, after so many years of being in business! Surely they could give greater breaks on prices of food than we are seeing! A donation to charities now and then is not adequate contribution to our society. Each Cabinet Member and LA Member – seriously – should take a turn doing the shopping for their households even once a month and see what we, the ordinary citizens who do that daily, weekly are paying! Many of us do not have the means to shop wholesale in order to save a little.
Whilst a bit off subject, the question to ask is – ” who actually benefits from Duty Free sales. ” What do the owners pay as a Licence Fee to operate. There should be a Sales Tax levied on their gross turnover, because they are the only ones making any revenue, or profit, from what they sell.
The “duty free” industry was created through legislation back in the 70’s as an attraction to tourists. The concept only works if there is a price differential between prices here vs. the U.S. While the initial legislation did exempt certain luxury goods from duty, subsequent governments came in and added duty to almost all of the ” duty free” items. To maintain pricing at say 15% below US retail, so called “duty free” merchants have had to steadily reduce margins to compete and maintain the required price differential. Like all other retail businesses in Cayman, CIG already makes far more money from these operations than the owners could ever hope to.
If you want to find an untaxed pot of money, forget retail, you need to be looking at big Law and Finance.
Really?? Who are the wealthiest Caymanian families pre-Dart?
That would be the hardest working ones. Funny how that works.
What’s this with “trickle”down?. When oil prices zoom up local gas prices gush up, when oil prices go down, local gas prices “trickle” down – if we are lucky instead of gushing down as they should. A clear case of price rigging and collusion from our local distributors.
What about us addressing PROPANE GAS at the same time, because the price for that keeps climbing and nothing is said about it. Monopoly is the cause of most of our problems and worse if we sit by and watch it happen, and have nothing to say. Target PROPAN GAS as well.
@12:37pm…agreed. Must be addressed also. We must bring propane into our discussion on cost of living and it MUST be addressed.
Agreed 100% @ 11:05am.
Simple solution–charge duty on fuel based on a percent of the landed cost to the importer instead of the flat rate of $0.75 per gallon. Then Customs will know the import prices and any price fixing conspiracy will be easier to see. At the same time you could lower the duty. Today, pump prices in much of the US are below $2.00. This is the same as CI$2.00 per Cayman imperial gallon. If you assume the importer pays that retail price (and god knows they should do better than that because the US wholesale price is about $1.40.), then the duty rate of $0.75 per gallon of gasoline is 37.5%. You can ship gasoline anywhere in the world for less than 15 cents a gallon so the importer may be paying only $1.40 plus $0.15, or $1.55, in which case the duty rate amounts to 48%. That being said, Cayman’s gas prices are ridiculous. It does not cost $2.00 more to get a gallon of gas to the pump in Cayman than elsewhere. So who is getting the excess profit? Rubis and Sol appear to be making a killing.
@10:30am; I could not have said it any better myself.
Price gouging!
My own calculating shows that for years the fuel importers have been making upeards of $90 million profit on our backs.
Average fuel imported equals 52million gallons annually. That is supported by Govt’s projected revenue from its underlying volume of .75 or $39 million.
Nothing will ever happen in Cayman with its current corrupt leadership. A shaking is VERY close. Make sure you are prepared, both physically AND spiritually. Freedom is so tantalizingly near.
“current corrupt leadership”? Really? I am guessing you are a faithful UDP Kool-Aid consumer?
I hear the price of kool aid has been steadily gushing down…
What we need is for the underworked MLAs to hold select committee meetings and call experts, including oil executives, economists and others and let us the public be better informed and craft recommendations and legislation that will ensure free trade etc. and forget about trickledown economics as these self-interest mosty cartel family controlled enterprises will never pass on a dime in any savings to the consumers. Look at the cruise port who will mostly benefit? The large family-owned merchants but will they invest a dime in developing the cruise port and the revitalization efforts of GT? No. They want us the taxpayer and don’t try to fool us about how manny Caymanians will benefit from direct employment or be out of a job. Just walk into any of these shops and see how many Caymanians are employed or young people who have benefitted from scholarships. At least Dart will even build the roads and other infrastructure to support his developments and lots of Caymanians are employed by him. MLAs you all have been a failure and some government ministers and we won’t be fooled next time either about so-called critical thinkers your lobbyists will need a new slogan. Maybe as much as I don’t agree with the guy who created the solan ‘let us make America great again’ it won’t be a bad ideas just to insert Cayman instead of America and let’s make Cayman great again.
You are confused. Those same Caymanian families that you are putting down all did their part in making Cayman great as you say. Mr. Dart came here to pick the fruit from trees that were planted and nurtured long before he knew what a Caymanian was. It’s an unfortunate trait of Caymanians to put down their own people while thinking people like Dart have their interests at heart.
Yup. Coz those established families have done so much for the general welfare – parks, roads, developments…oops am I confusing them with the Johnny come lately? He may not have owned slaves in the day, but somehow seems to do things that are i the general interest as well as his own.
Your Uncle Dart is only here to make money. His roads are either part of his own developments or they are part of one sided and questionable deals he made with our former Premier. See the AGs value for money assessment on the Dart deals. Same for the parks which make it appear he is a philanthropist and doing it for the good of the Country. Make no mistake, we all paid dearly for the Dart roads and parks.
AT LEAST THERE ARE PARKS AND ROADS NOW THOUGH. I don’t see a Kirk Park anywhere…
Actually it is called the Rugby Club, Squash Club, and CI Tennis Club.
The wealthiest Caymanian families have been here and in business for many years before Dart and company came. That is why they are the wealthiest ones, compliments of the buying public! Das wha ah said! Nothing wrong with anyone accumulating wealth as long as the hunger for more and more ad infinitum does not cause disproportionate hardship to those who need the products and/or services that they offer. Enough already! Gimme a good ole Govt, credit card and point me to the nearest casino! Weekend soon come!
Interesting move, yet unconvincing. The truth is behind you and will eventually bite you in the nether regions. Look at the earlier article.
Hmmm, mechanisms, indeed. Such “mechanisms” are working real well in Venezuala right now!
http://www.theguardian.com/global-development-professionals-network/2015/apr/16/venezuela-economy-black-market-milk-and-toilet-paper
I hope that if Government does anything about gasoline prices that they look at retail as well as wholesale pricing instead of accusing the oil companies as being the lone culprits.
Fortunately, Cayman is for most businesses, a competitive free market economy. If any one industry yields excessive profits, then others will rush in for a piece of that particular pie. The margins eventually reduce to yield a fair return on investment (and hard work). There are 2 problems in the case of the oil companies. First is the lack of anti-collusion laws in the Cayman Islands (they talk and set pricing), and the second is the barriers to entry in that industry.
You got it, cartels and protectionism, illegal in the UK by the way…Privy Council test?
@8:08am…agreed. I myself think that our problem with high gasoline fuel prices can be split 75% fault of the Importers and 25% fault of the retail gas stations.
So; yes….they BOTH have to be held to account.
Venezuela produces its own oil, no comparison to be made.