As Fuel Prices Rise, what are we going to do?
The economic uncertainty caused by the Russian and Ukrainian conflict, disruption to global supply chain because of the pandemic, an under performing US economy, an of recent a possible ratcheting up of tension between China and the US linked to Taiwan among other negative factors continue to be a source of concern for small developing states like Barbados.
Recently the blogmaster was intrigued to read about a local campaign by a leading gas distributor promoting today (Tuesday 3 Aug 2022) as as an opportunity to earn 200 bonus points if more than x dollars was spent at the pump. While the marketing department of the large dealership is pulling out the stops to sell more gas, there is the report Barbados experienced a spike in import cost reported as $2.05 million dollars of which $634.3 million was for fuel for the first six months of the year. The fuel bill for 2021 was $685.8 million and for $506.6 for 2020. Although the comparative to 2020 and 2021 was influenced by less activity because of the pandemic, it does not change a scary reality that significant chunks of Barbados’ foreign reserves is being used to pay for fuel. In the first half of the year $813 million was earned from our main foreign exchange earner to give an idea of the significance.
Sourcing affordable fuel is the objective of any country because it strikes at the heart of maintaining a stable standard of living and economy. At the household level rising fuel will soak up discretionary funds. Of immediate concern to Barbados is that this translates to potential travelers to Barbados forced to make alternative plans. Barbados is a price taker, we produce precious little commodities of what we consume. The domestic economy needs fuel for transportation, EMERA generates mostly fossil based electricity, input for business etc. An increase in the price of fuel negatively affects cost of living. Although the government is expected to create a buffer, there is a limit to mitigants available.
Last month Minister of Commerce Kerri Symmonds implored Barbadians to appreciate the seriousness of the predicament Barbados find itself and to consider engaging in tactics to conserve. The reality is that the majority of Barbadians are not prepared to make adjustments, for example car pooling, accessing public transportation, businesses (including public sector) reverting to working from home during this difficult period to assist individuals. There are decisions we can make to ameliorate the effect of out of control fuel price, however, we appear to be in reactive mode.
We have a country struggling to get a public addicted to conspicuous consumption to conserve and there are the countervailing forces like gas dealerships encouraging consumers to purchase more fuel. We live in interesting times.
To coin a popular expression, challenging times create the opportunity for an inventive people to rise to the fore. Are we there yet?