Fuel bill aims to improve consumer confidence

| 06/04/2017 | 11 Comments

(CNS): The minister of planning, who has responsibility for the fuel sector, has said that legislation passed in the Legislative Assembly last month to regulate the industry is about improving consumer confidence that the price of gas is competitive and fair. “We cannot afford to be captured or appear to be captured by the industry in this sector,” Kurt Tibbetts said, adding that the PPM government wasn’t aiming to enforce price controls but to promote fair competition, to protect consumers and ensure the stability and security of the fuel supply.

“Until now our laissez-faire approach, where we have relied on the suppliers to act in the best interest of consumers, has not enjoyed the confidence of consumers,” Tibbetts said in a statement released this week, having steered various pieces of legislation through the LA before it was dissolved. The laws passed related to fuel regulation and the management of utilities through a new regulatory body, the Utility Regulation and Competition Office (OfReg).

Tibbetts, who announced his retirement from politics as the parliament closed, said the new laws represented a major milestone in the strategy to manage the local fuel market. Speaking about his last major contribution to the legislative landscape, Tibbetts said the primary objective was not price control but promoting competition.

“The introduction of price controls would be an absolute last resort, and only where it is clear that the competition has failed,” he said, repeating previous assurances.

The minister has said on previous occasions that he would be willing to take that step if it became apparent that the bulk fuel suppliers were colluding or misleading the consumers on prices, though the next minister who takes over after the May elections may not hold the same view.

Tibbetts said the regulator would now begin to continuously assess the state of the markets by collecting information and data from the fuel companies to conduct the necessary analysis “on an ongoing basis”, as the law gives the public servants the power to gather this data.

Both the Dangerous Substances Law and the Fuel Market Regulations Law provide the framework for the monitoring of markets and for OfReg to “take action to secure fair competition and bring some order” to market operations, Tibbetts explained. The public, however, will not get to see the data that shows how the fuel companies and gas stations arrive at the pump price.

Tibbetts believes that, rather than price controls, the new regulatory regime will allow for oversight of the sector based on “established key metrics and parameters” and, if they are found to be deviating from the target, the regulator will step in to introduce “compensatory measures to bring prices back on track”. If the market fails, the regulations provide a remedy, he said.

“To do this in a transparent and predictable manner, OfReg’s first duties will be to set market rules which all suppliers will be required to abide by,” Tibbetts stated. “These rules will set the conditions for price monitoring the market as well as guidelines for introducing price changes. This is where our regulatory mechanism is set up and empowered to facilitate innovative ways to allow the market to function efficiently and competitively to continually achieve fairer prices.”

He added, “Leaving the market to itself is not an option at this time.”

Tibbetts said that from now on, the regulator will have access to the right information and will be able to utilise the right tools, techniques, expertise, benchmarks and models to perform the right analysis. It will be able to consult with stakeholders and industry players and take appropriate, proportionate action.

“In years gone by we have had great fears of the potential consequences of any actions we take in regards to the fuel sector,” he said, because it was an “essential commodity and service”.

But the minister said that OfReg’s mandate was to promote fair competition and protect the consumer as well as secure the fuel supply.

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Category: Laws, Politics, Private Sector Oversight

Comments (11)

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  1. Anonymous says:

    What is interesting is since it was declared that a laissez-faire approach has failed to comfort the consumer why did the Minister responsible for pension advocate a system where the pension providers would be also regulated by the market. Now, this is not political at all.. this is about betterment of the country and a paramount question the law makets must always ask is or must appreciate is that market do not regulate themselves very well expecially markets that lack free will and choice. Sometimes, bold new choices need to be made and regulation that advances people interest even if that means less service providers.

  2. Anonymous says:

    Too manyPPM Politicians envolved in the Gas stations, thats why they won’t do any thing about it, vote them out.

  3. John Rockefellow says:

    When there is only one place to get fuel you are going to have price gouging. When there are more than one place you will have collusion and price fixing. It’s the way oil companies and politicians operate. Love is not what makes the world go around. It’s greed! Humans are greedy beings. Politicians and company officials are humans. The oil companies in the U.S. all sell their products within a few cents of one another…. It’s the same in the Caymans. That way, they all make a nice profit. They do have laws against collusion and price fixing, but when is the last time you saw any action taken to stop it? I don’t remember any action being taken against collusion among the oil companies……… or any action taken against politicians for their acts of accepting payoffs either. And remember…… oil companies never lose money.

  4. Anonymous says:

    Let’s hope those who sit on the regulatory boards or committees are not the gas station owners! It’s not like those kind of conflcts don’t exist elsewhere.

  5. Caymanian says:

    Well a few questions can be answered straight off.

    Is there actual competition? No in the way we think of competition. Barcam seems to set a mark that Brown’s Red Bay more or less matches. All other Esso stations fall in sync at a price. As of today its 4.24/g and that’s the price at Brown’s Industrial, Both H&B Esso stations and more than like others also.

    As for Rubis they are more or less matching each other within a few cents. So that’s not true competition per say. It’s price matching.

    • Anonymous says:

      In the Brac , gas is $ 4.75 per gal.and they only pay !2 i/2cents (Twelve and half) duties to Govt. The Gas stations makes more than $ 2.00 per Gal.and remember they don’t have to truck it, all the hose,nozzles, pumps etc, etc, Rubis supplies or fix it for no extra cost them, Rubis even clean the tanks.. By cutting the duties from 75 cents like in Grand to 12/12 in the Brac,, only helps the the gas stations and not the ones buying the gas The politicians won’t do any thing about it.

  6. Anonymous says:

    So basically everything stays as it was.
    In florida the gas is at the moment 1.88 ci per gallon. Why is it 4, 23 ci over here ?
    Because politicians give them the possibility.

  7. Anonymous says:

    Tibbetts woke up? Holy crap! Did anyone tell him that Obama is no longer President?

    He actually used the phrase “Laissez faire”?


  8. Anonymous says:

    Quality control at the pump is the biggest issue for me. I don’t mind paying $4/gallon without the rust particulate, seawater, and fuel-diluting additives that will destroy my engine. Price controls would compel stations to cut their product in the absence of supervision and fines. Let’s not go “full blinders” on price without matching quality supervision at the pump. Each station should have a regular inspection report card for consumers to inspect and a regulatory site with easy to identify station-attributed inspection reports.

  9. Sharkey says:

    Mr. Tibbetts didn’t say that the price of gas was fair to the consumer. He said that they had improved the consumer confidence and the price is competitive and fair . To who ?
    I think that we would go broke or die before we get cheaper gas prices if this Government always have the say .

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