The supply of fossil-based energy to a small developing country, in the face of the ever-increasing cost of oil, always produces considerable debate. Ever since the first oil crisis in the early 1970s when the price of oil skyrocketed, we have had our fair share of challenges in ensuring our economic and social development.
We have to pay in foreign currency for the supply of fuel, the price of which influences the cost of our landed food at the Bridgetown Port. In addition, our inland food distributive trade experiences higher costs, which are passed on to the consumer whenever there is an increase in fuel costs. Fuel drives every aspect of our industry.
Small open economy as we are, it would not be far off the mark to say that we suffer a double whammy whenever the price of oil rises; our foreign reserves take a hit and so too do our local food costs.
We are powerless to control the cost at the point of supply, and we have little elbow room domestically since the taxation on fuel is a key revenue component, given our limited tax base.
It is almost a catch-22, and the most careful calibration is needed if the vulnerable in our community are not to be cast adrift, and our foreign reserves to fall to unacceptably low levels.
There is, however, a divide between the two political parties on the policies that should speak to an easing of the cost of fuel for domestic consumers, and as a component of the costs of supplying electricity by the Barbados Light & Power.
The Opposition has called for a subsidy in the amount of $35 million to be applied across the board to ease the cost of fuel.
It says these funds could come from the profits of the Barbados National Oil Company (BNOC) amounting to $110 million in the last two years.
For its part, the Government has declared that the BNOC does not have the money to provide that level of subsidy, and that the so-called surpluses are book profits only.
In the meantime, the Government has set up a facility to ease the plight of those genuinely in need.
The suggestion of across-the-board subsidization has therefore been rejected.
It seems clear that energy policy continues to be a hot-button political issue. The tragedy is that on such a very important matter, there cannot be consensus between the two parties.
It is obvious that the Government has certain revenue challenges and that the viability of BNOC is important, but we hope the door has not been closed on looking to see how some additional measures aimed at mitigating the cost of fuel could be implemented, given the sharp bite of the recession on household budgets.
We support the idea that our expertise in the technology of solar water heating should be developed and applied, so that we might eventually benefit on a large scale from lighting as well. In this regard, we applaud the installation of the two solar-powered street lights in Tudor Street, The City.
If solar-powered lighting could be applied at the domestic level, it would help some householders to reduce their electricity bills and would also cut the outflow of valuable foreign exchange – and might see some chance of a more flexible policy on general fuel pricing.
There is no easy solution; and every proposal breeds its own problems. We must therefore conserve our use of available fossil-based energy while we search for and apply the best mix of alternative energy solutions maintaining our social development.
