Hamid Ghany

The ad­mo­ni­tion to taxi dri­vers by Fi­nance Min­is­ter Colm Im­bert that they would be "un­pa­tri­ot­ic" if they were to raise their fares was a very harsh state­ment to make to any­one who runs a busi­ness. The Pres­i­dent of the Route 2 (Red Band) Maxi Taxi As­so­ci­a­tion, Li­nus Phillip, re­spond­ed as fol­lows to the min­is­ter's fu­el price in­crease af­ter his as­so­ci­a­tion met on the is­sue:

"I think com­muters can rest as­sured at this time that there is no plan to in­crease the fares on Route 2. How­ev­er, the as­so­ci­a­tion will close­ly mon­i­tor where the busi­ness sec­tor is go­ing to go with the in­crease but if they start in­creas­ing costs on us we will have no oth­er choice." (Guardian, April 13, 2016, p A7).

In the fu­el sec­tor, the re­al pa­tri­ots must be the pe­tro­le­um deal­ers them­selves who op­er­ate gas sta­tions across the coun­try. The re­al­i­ty is that these deal­ers have seen their prof­it mar­gins evap­o­rate. When su­per gas was at $2.70 per litre up to last Oc­to­ber, their prof­it mar­gin was 17 cents on every litre sold. When the min­is­ter raised the price to $3.11 per litre, their prof­it mar­gin re­mained at 17 cents on every litre sold. Two Fri­days ago, he raised the price to $3.58 per litre and the prof­it mar­gin for the deal­ers re­mained at 17 cents per litre.

That is a very large de­cline in their ac­tu­al prof­it mar­gin (from 17 cents out of $2.70 to 17 cents out of $3.58) in a busi­ness that does not have the lux­u­ry of ad­just­ing prof­it mar­gins to suit price in­creas­es ow­ing to the ex­is­tence of state con­trol of the pric­ing of fu­el. Added to that, the deal­ers al­so have a 0.9 per cent busi­ness levy to pay which puts their slim prof­it mar­gin un­der fur­ther pres­sure. Ad­di­tion­al pres­sure on the same prof­it mar­gin will al­so come when­ev­er a cus­tomer us­es a cred­it or deb­it card as there are han­dling charges in­volved.

It is quite pos­si­ble that many gas sta­tions may have to re­duce their open­ing and clos­ing hours in or­der to elim­i­nate op­er­at­ing dif­fer­ent shifts be­cause this will be­come more of a labour is­sue ow­ing to the fact that jobs are in­volved along­side very slim prof­it mar­gins.

The re­al­i­ty is that the coun­try is not go­ing to come any­where near to the free-mar­ket style of op­er­a­tion of gas sta­tions in oth­er coun­tries where the price can fluc­tu­ate be­tween one day and the next. That would re­quire a lurch in the di­rec­tion of re­mov­ing the du­op­oly of gas sta­tions that is cur­rent­ly con­fined to NP and Unipet to al­low oth­er pri­vate sec­tor providers in­to the mar­ket­place. Al­so, it would be nec­es­sary to have an­oth­er provider com­pet­ing with Petrotrin as an al­ter­na­tive source sup­pli­er of fu­el to the mar­ket­place for re­al price com­pe­ti­tion to take place.

We are nowhere near that kind of free-mar­ket think­ing, yet the whole fu­el sub­sidy de­bate is be­ing couched in a man­ner that would sug­gest that once we re­move the sub­sidy then the forces of the mar­ket­place will take over. That is not true. How it should work is that when the price of oil goes down, so too will the cost of fu­el at the pump and when the price of oil goes up, so too will the cost of fu­el at the pump. What we have is the min­is­ter fix­ing the price of gas at the pump, full stop.

The min­is­ter stat­ed that the par­a­digm has changed and these are dif­fer­ent times. Un­for­tu­nate­ly, there has been no philo­soph­i­cal po­si­tion ar­tic­u­lat­ed that can guide the na­tion. Are we us­ing a free-mar­ket ap­proach, a state-con­trol ap­proach, a mixed-mar­ket ap­proach or a make-it-up-as you go ap­proach?

There are di­vi­sions in­side of the Eco­nom­ic Ad­vi­so­ry Board led by Dr Ter­rence Far­rell which are ap­par­ent on the out­side when one lis­tens to the pub­lic com­men­taries of trade union­ist/politi­cian David Ab­du­lah who is al­so a mem­ber of the same board. Ab­du­lah's lat­est com­ment on the mea­sures an­nounced by Fi­nance Min­is­ter Colm Im­bert was:

"There has been no sig­nif­i­cant–if any at all–con­sul­ta­tion or en­gage­ment of cit­i­zens, or of stake­hold­ers with re­spect to the state of the econ­o­my and pro­pos­als go­ing for­ward...We do not count in­di­vid­ual con­ver­sa­tions a min­is­ter or prime min­is­ter may have had with a busi­ness­man or rep­re­sen­ta­tives of a firm as rep­re­sent­ing prop­er con­sul­ta­tion or stake­hold­er en­gage­ment." (Guardian, April 11, 2016, p A7).

As if that ev­i­dence of di­vi­sion was not enough, the philo­soph­i­cal con­trast be­tween him­self and Im­bert's pol­i­cy of di­vest­ment was best ob­served in the same ar­ti­cle:

"Every­thing is wrong with the sale of Cli­co and with the sale of Re­pub­lic Bank and there­fore we are op­pos­ing it and the MSJ will cam­paign stren­u­ous­ly against that sale."

Im­bert an­nounced that the shares in these com­pa­nies will be vest­ed in the State be­fore they are put on the open mar­ket for sale. In the in­ter­est of trans­paren­cy and good cor­po­rate gov­er­nance, all of the di­rec­tors of these com­pa­nies should be re­quired to de­clare their as­sets and li­a­bil­i­ties to the In­tegri­ty Com­mis­sion be­fore the sale be­cause these en­ti­ties would have be­come state en­ter­pris­es.