AT MIDNIGHT ON SUNDAY, September 6, the retail price of gasoline was dropped from $3.27 per litre to $3.19 per litre. The move came after a summer of declining oil prices. Converted to gallons, that works out to about US$6.05 per gallon.
Bloomberg Business has just published a survey of gasoline prices around the world, looking at 61 countries. Barbados is not among them, but if our country was ranked it would be number 17 on that list, that is, about a quarter of the way down.
Above would be Norway (US$7.71 per gallon), the country with the most expensive gas in the world, although it is oil rich. It puts its money into free education and infrastructure projects.
The 16 countries above us would include Hong Kong, the Netherlands, the United Kingdom, Israel, Greece, Germany and Singapore. The price of a gallon of gasoline is higher in those countries than it is in Barbados.
The countries where the price is lower include New Zealand (US$5.51), Brazil (US$4.48), Australia (US$4.38), Japan (US$4.37), China (US$4.31), India (US$3.95), Canada (US$3.66), United States (US$2.74), Russia (US$2.36) and, of course, Saudi Arabia (US 45 cents, and Venezuela US 13 cents.
Currently, the price of a litre of gasoline in Trinidad & Tobago is TT$5.51, putting the price of a gallon at TT$20.86, or the equivalent of US$3.29. That is almost half the Barbados price. The price of gasoline in Jamaica over the past week has ranged between J$112 and J$124 per litre, so let us say it is around J$115. That puts the cost of a gallon at around J$435.37, which is the equivalent of about US$3.67, or about 60 per cent of the Barbados price.
So what is going on in Barbados to make the price of gasoline so high?
Well, let me give you the official rationale first. According to the Division of Energy, the latest “adjustment” in retail prices “was due solely to an adjustment in the CIF (cost, insurance and freight) of these refined products”.
I feel the need to remind you that Government says it had a “mechanism” in place to adjust petroleum prices in a more timely fashion. Under said mechanism, prices are regulated by the Ministry of Commerce on the advice of the Division of Energy and Telecommunications.
Now, all of this sounds good in theory, but no one ever told me exactly how it is done. Well, I had a dream the other night as to how this might be done in practice. Please note this only exists in my fevered brain, and has nothing at all to do with reality.
In order to set the latest oil price, a group of experts meets in a conference room to ponder all of the variables. They are presented with reams of statistics on oil prices, futures, inventories, and whatever else may be needed to make their decision. Then they all laugh out loud, chuck them all away, grab a few Banks beers and gather around the darts board.
But this is no ordinary darts board. Someone has gone to the trouble of tacking on prices in almost every spot on the board. The officials throw their darts and the numbers they hit are logged on a piece of paper (computers do not show up to often in my dreams).
In a bow to the Olympian way of judging, the lowest and highest prices are thrown out and an average taken of the remaining ones, which then becomes Barbados’ latest price per litre of gasoline. The process is repeated to get the prices for diesel, liquified petroleum gas, and any other energy price that might be needed.
How would you otherwise explain why we are paying more for gasoline ($3.19 per litre) today when the average price of a barrel of oil is roughly the same as it was in January, when the price was frantically reduced to $2.83 per litre?
Even in May, when average global oil prices were inching back up and had reached the vicinity of US$60 per barrel, the price was only raised to $3.08 per litre.
And when the price per barrel started falling during the summer, the Barbados price per litre was going the other way, reaching $3.27 in the same month of July when prices were in the mid fifties.
It seems to me that the Government needs a new “mechanism” in order to “adjust” gasoline prices in keeping with reality, For now, I’m going to stick with my mind’s eye view of darts hitting the board.