The Bahamas Trade and Industry Minister, Leslie Miller appeals to the Bahamian driving public to do whatever they can to reduce their fuel consumption as the price of gasoline explodes

Minister Leslie Miller suggested that motorists in The Bahamas car pool; use smaller, more economical vehicles; use public transportation; and cut out the unnecessary driving - in the wake of increasing fuel prices

Gas Prices Skyrocket

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

20th September 2005

Trade and Industry Minister Leslie Miller on Monday announced a new round of gas price increases, indicating that one company has received approval to raise the cost on a gallon of gasoline to $4.77.

It would be a 76-cent per gallon increase for Shell Bahamas.

"Today, I am returning to appeal to the Bahamian driving public to do whatever they can to reduce their fuel consumption," Minister Miller said.

He suggested that motorists car pool; use smaller, more economical vehicles; use public transportation; and cut out the unnecessary driving.

"When I made these calls before many persons did not recognize the severity of this situation," he said.

The $4.77 price is the highest the cost per gallon of gasoline has ever been in New Providence, according to the Minister.

"This will push gas to well over $5 in the Family Islands," he announced.

Effective today, the price for a gallon of gasoline in New Providence will be $4.77 at Shell; $4.03 at Texaco; and $4.02 at Esso.  The price for a gallon of diesel at Shell will be $3.62; at Texaco it rises to $3.64; and at Esso it increases to $3.26.

"These increases are truly amazing, since prices in The Bahamas are going up by more than 75 cents while prices in Florida reduced by about six cents on the weekend," the Minister said.

"It was also interesting to see that in France Total SA (The French Oil Company) recently pledged to pass reductions in prices to consumers within a few days, and to wait longer to pass on increases in order to protect the consumers from spikes.

"It was also interesting to note that the French Minister was unable to get any firm commitment from the foreign oil companies who were present at the meeting to assist with the prices or to invest more in refineries to help to rectify this situation."

On Monday, the Associated Press reported that crude-oil futures surged more than $4 – the biggest one-day price jump ever – amid worries that Tropical Storm Rita strengthening off The Bahamas could hit U.S. oil facilities in the Gulf of Mexico later this week, striking another blow at an industry struggling to recover from Hurricane Katrina.

The swells in crude, heating oil and gasoline futures came as OPEC ministers met to discuss how to relieve price pressures in the oil market and expressed concern that Rita would bear down on the hurricane-ravaged U.S. Gulf Coast, the AP said.

In The Bahamas, there has been a steady rise in fuel costs this year, which has also translated into a steady increase in the fuel surcharges of electricity bills.

The latest round of bad news comes as Minister Miller continues to push the PetroCaribe initiative.

Through the deal, Venezuela has agreed to provide fuel and fuel-related products cheaply to the region.

Minister Miller has said that it would mean huge savings on electricity bills and at the gas pumps.

He recently told The Bahama Journal, "We’re looking at an average savings of no less than $6 per barrel which equates to approximately in our estimation anywhere from 25 cents to 30 cents on a gallon of fuel.

"That’s the initial cost.  Bear in mind that the oil companies here use their brokerage companies, in Barbados and Jamaica and elsewhere, to purchase fuel from PDVSA, which is where we’re going to get our fuel.

"By eliminating the middlemen, we save another 25 cents to 35 cents on a gallon of fuel.  In addition to that, PetroCaribe is now in a position by having ships to lift the fuel for you.  In other words, PetroCaribe would send one of its ships to The Bahamas full of fuel emanating from any of the terminals owned by PDVSA, which is the national oil company of Venezuela, thereby saving an additional 5 cents to 10 cents on a gallon of fuel."

Mixed Reviews In The Bahamas on PetroCaribe initiative

The concerning consensus is that more consultation is needed between the government, the three major oil companies, and retailers in The Bahamas on the PetroCaribe agreement 

Oil Deal Gets Mixed Reviews

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

4th July 2005

Players in the local oil-providing sector have mixed reviews on the recent signing of the PetroCaribe initiative, which promises to cushion Caribbean nations – including The Bahamas – from skyrocketing fuel costs.

But there is consensus on the fact that more consultation is needed between the government, the three major oil companies, and retailers.

Oil companies are seeking clarification on the whole deal, said Troy Simms, country/sales manager at Esso.

"We feel we should be an advisor to the government on this considering the experience we have locally and of course across the globe," Mr. Simms said.

"This is a pretty important change that’s being put on the table.  We really want to make sure that it’s being discussed with a lot of rigor to make sure that the government is fully aware of the risks."

Texaco’s manger, Raymond Samuels was out of town, but another executive at the oil company said that Texaco is also eager for dialogue on the initiative.

The executive said up to now, Trade and Industry Minister Leslie Miller has "not been open with us" about the plan.

Under the plan, signed by regional energy ministers and other leaders in Venezuela last Wednesday night, Petroleos de Venezuela, the state oil company, will pick up 40 percent of the cost if oil is selling at more than $50 a barrel.

Venezuela has also promised that additional concessions would become available should prices reach $100.

Petroleos de Venezuela has also announced that it would also pay for oil shipment costs, and help to construct storage facilities throughout the region.

It’s a plan Minister Miller said last week would result in "tremendous savings" on electricity and cooking gas bills and at the gas pumps.

It would be welcome news, said Gardner Dawkins, president of The Bahamas Petroleum Retail Association.

"I think it will be good news for both the retailer and consumers," he told The Bahama Journal.  "We’re hoping that we’ll be buying fuel at a lower price.  Therefore, passing the savings on to the consumers."

Minister Miller has said those savings would be significant – up to $20 million in savings for BEC annually, and at least $1 in savings on a gallon of gasoline, which is now approaching $4.

Mr. Simms, the Esso manager- said that the company is not sure of the likely impact PetroCaribe would have because it has not yet received details of the agreement.

Petroleos de Venezuela has agreed to ship fuel directly to Caribbean nations like The Bahamas, which have signed the agreement.

Asked whether this would be something Esso would welcome, Mr. Simms said, "There’ve been some concepts discussed and we continue to wait for some details.  One thing that the proposal seems to implicate is that there would be a single source of supply and this appears to be with the Venezuelans."

He said there are risks in having a single source of supply and Esso’s primary concern would be about reliability of supplies.

"If we can’t get the product when we need it, it’s going to have a detrimental impact on the business," Mr. Simms said.

He added that his impressions of how the whole arrangement would work is that the government would become the middleman.

"We need to fully understand how this would be implemented because this is a very complex and sophisticated supply system that’s now in place, that has been successful for so long.  We have a lot of experience…the industry can handle unexpected changes and delays," said Mr. Simms, while stressing that the supply of oil to a small country like The Bahamas is a complex and costly undertaking.

"The folks in our industry have learnt over many, many years how to do this efficiently and be reliable.  We need to be able to deliver petroleum products in a very safe and reliable manner."

Mr. Simms said that it’s much too soon to even speculate on how the PetroCaribe is likely to impact profits of local oil companies.

In his interview with The Bahama Journal last week, Minister Miller also said that the government expects to take another look at the operating margins in the industry.

Mr. Dawkins said this is something that retailers will fight.

"Our margins are what we survive on," he said.  "The price of the gasoline will not change what our margins are."

He added that PetroCaribe would have more of an impact on the wholesalers because they are the ones who will be buying from PetroCaribe or the national energy corporation.

"So therefore we as the retailers will still be at the mercy of the wholesalers who we will be buying products from," Mr. Dawkins added.

He disagreed that PetroCaribe will be risky business.

"The oil companies, of course, are not going to be too happy with it," Mr. Dawkins said.

The Bahamas Signs Petrocaribe Initiative

The primary thrust of the initiative, known as Petrocaribe, is to eliminate the middlemen when it comes to the purchase of fuel and fuel-related products

Oil Deal Sealed

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

1st July 2005

Bahamian consumers are expected to soon experience significant savings on energy costs as a result of a new deal sealed in Venezuela on Wednesday night, which is designed “to build a regional oil alliance and distribute fuel more cheaply in the Caribbean.”

Minutes after arriving from a high-powered energy summit in Puerto La Cruz on Thursday, Minister of Trade and Industry Leslie Miller declared that the agreement was a significant and historic one.

He also explained that the primary thrust of the initiative, known as Petrocaribe, is to eliminate the middlemen when it comes to the purchase of fuel and fuel-related products.

One of the ways Venezuela proposes to keep oil costs down in the region is to use its tanker fleet to transport oil instead of privately owned tankers.

"For The Bahamas, [The Bahamas Electricity Corporation] can realize a savings of no less than $10 million to $15 million per annum in their fuel costs," Minister Miller told The Bahama Journal.

In addition to that, BEC, which last year spent in excess of US$100 million for its fuel costs, can now get the benefit of getting 40 percent of the fuel on credit from Petrocaribe, he said.

"BEC can get rebates on fuel and at tremendous savings," Minister Miller said.

"If BEC were to purchase $20 million worth of fuel per month, BEC would pay approximately 60 percent of that bill.

The balance can be paid over a specified period of time at 1 percent interest rate."

With the middlemen being sliced out of the pie, the Minister also reported that huge savings are on tap at the gas pumps.

His announcement came as motorists continued to face prices approaching the $4 per gallon mark.

"We’re looking at an average savings of no less than $6 per barrel which equates to approximately in our estimation anywhere from 25 cents to 30 cents on a gallon of fuel," he said.  "That’s the initial cost.  Bear in mind that the oil companies here use their brokerage companies, in Barbados and Jamaica and elsewhere, to purchase fuel from PDVSA, which is where we’re going to get our fuel from.

"By eliminating the middlemen, we save another 25 cents to 35 cents on a gallon of fuel.  In addition to that, Petrocaribe is now in a position by having ships to lift the fuel for you.  In other words, Petrocaribe would send one of its ships to The Bahamas full of fuel emanating from any of the terminals owned by PDVSA, which is the national oil company of Venezuela, thereby saving an additional 5 cents to 10 cents on a gallon of fuel."

Altogether, he claimed the average consumer can look for a savings of anywhere from 65 cents to $1 per gallon on the price of fuel in The Bahamas.

The Minister added, "Keep in mind that we still need to cut the margins by the three major oil companies that import fuel into our country from a high of 33 cents down to around 25 cents to 15 cents per gallon, which is more than enough to enable them to make an appreciable profit margin."

But Minister Miller could not say specifically when the savings will begin to materialize.  He told The Bahama Journal that it will happen as soon as the government gives the green light for the establishment of a national energy corporation.

"The prices at the pumps could be decreased significantly, but we must initiate the national energy corporation to enable us to lift fuel from Venezuela," he said.

Heads of state and energy ministers attended the energy summit from The Bahamas and 14 other nations in the region.

They included Dominican Republic, Jamaica, Belize, Antigua and Barbuda, Barbados, Grenada, St. Kitts-Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Cuba, Venezuela and Trinidad and Tobago.

The final agreement said, "Petrocaribe emerges as a new political and commercial initiative based on the conservation of non-renewal and depleteable resources, shared solidarity, and social co-responsibility between peoples, tending to assure access to energy at a just and reasonable price, under the sign of regional energy integration, with a broad vision that touches not only on energy, but also on the social, technological, and culture."

Among those attending the meeting were Venezuelan President Hugo Chavez, and Cuban President Fidel Castro.