The petroleum dealers in New Providence have no legitimate case for fuel price increase; in fact – they are among the highest paid entrepreneurs in the country

By Dennis Dames



The decision to not approve margin increases for petroleum retailers is a prudent and wise one on the part of the prime minister and government of The Bahamas.

I have been in the business for three years working closely with one Mr. Godfrey Clark - dealer. We were operating three Shell service stations: Thompson Boulevard, East Bay Street, and Robinson and Blue Hill Roads.

They were among the lowest volume stations on the Island; yet we were able to survive with profits for the stated period.

The East Bay location was the slowest of the lot, but the shop was able to keep that station afloat.

There are petroleum dealers in New Providence who are making big profits, because they have the volume, and their shops are very profitable. If a dealer is pumping 100,000 gallons of gasoline a month at forty-four cents ($ 0.44) profit a gallon; he makes $44,000.00 dollars – exclusive of the shop earnings.

There are a significant number of service stations on the island that have volume of 100,000 gallons of gasoline a month, and the respective dealers of them are taking home more than $10,000.00 profit monthly.

How much more money is it that they want to take home?

The following stations in New Providence among others are doing more than 100,000 gallons of gasoline a month in my opinion: Shell Saunders Beach, Shell Oakes Field, Shell Harold Road, Texaco West Bay, Esso Wulff Road and Montrose Avenue, Texaco Blue Hill Road and Independence Highway, Texaco Faith Avenue and Fire Trail Road, and all of the On The Run Stations, and Heastie Esso Blue Hill.

I have deliberately left out the diesel and shop sales.

The petroleum dealers in New Providence have no legitimate case for fuel price increase; in fact – they are among the highest paid entrepreneurs in the country.

The island could be saturated with service stations - and that might be the reason why some dealers are not making money; and so they are crying for price increases. That’s not a consumer or political problem; thus - the people should not suffer higher fuel prices for this situation, nor should the government give in to blackmail on the part of petroleum dealers.

Caribbean Blog International

The Bahamian people can and should – with the help of appropriate labour – produce more of the food its people consume

Price Inflation and Food Shock

The Bahama Journal Editorial



Today some of what passes for new information has to do with the fact that the price for practically everything with the possible exception of labour is set to move upward.

This is what the economists mean when they talk about inflation; that situation where things fetch more and more while – on occasion – income marches in an opposite direction.

On occasion, situations arise when some people are hard-pressed to find money sufficient to pay for basics like food, shelter, heath and protection.

Sadly, this is becoming a reality for more and more Bahamians, particularly those who are ill, home-bound, indigent or otherwise marooned on Death’s door-step.

We now have another looming crisis on our hand. This time around is a situation where the government and people of the Bahamas must respond.

While we are quite certain that Social Welfare and charities galore in Civil Society can and will do what they must, we are also certain that these actions will only suffice to delay the coming of that day when some of those who are in distress might be pushed to take desperate action – with some of what they do bordering on the criminal.

But while this might yet become a reality in this already blighted and blasted place, we are sufficiently hopeful in our advocacy for the development of policies and strategies that could be of some great help, moving forward.

Bahamians can and should so gear themselves that they can produce more of the food they consume; and for that matter, more of the foodstuffs consumed by visitors.

The time is precisely now for our leaders and their Caribbean counterparts to come together with a view towards harnessing regional capacity.

This process could have the salutary effect of making the entire region less dependent on the rest of the world.

Information reaching us suggests that even if – by some magic- things were to return to some semblance of normalcy, food prices, fuel prices and the prices attached to technology and other commodities would continue to rise.

This analysis has evident implications and ramifications for countries such as the Bahamas that just happen to be ultra-dependent on the export and sale of services to sustain the life-styles to which they have become accustomed.

Put simply, all currently available indicators suggest that the Bahamian people should – as of now – brace themselves for the onset of any number of wrenching changes.

One such change involves this nation’s and our region’s speedier access to food that is inexpensive, nutritious, available and accessible, all at once.

Acceptance of such a formula immediately brings with it a slew of implications for labor law, immigration policy and relations with our neighbors in the region.

We deem this matter one that should be given priority attention: this because, the Bahamas unlike some of its sister nations in the Caribbean – inclusive of Jamaica, Cuba and Barbados, among others – is a net food importer.

This fact of life now underscores the grave importance of news coming in to the effect that, "... Rising international food prices could trigger an acceleration of inflation in several countries in Latin America and the Caribbean this year…"

The Inter-American Development Bank indicates that this now underscores what it describes as "…the need for policies to protect the urban poor…"

There are thousands of Bahamians who are today suffering from a double-barreled food whammy.

This two-pronged disaster derives not only from the fact that tens of thousands of them are obliged to eat food that is not only expensive, but also massively devoid of nutrients. Very many of them now have next to nothing with which to buy food.

These people are sometimes reduced to begging.

This situation is one that will be with us for the long haul; precisely because of the parlous situation in a United States that is itself battling with unemployment, a fractious political system and forces over which it has little control.

This suggests that even when recovery does come, tens of millions of Americans will work harder, save more and therefore spend less on luxuries such as a vacation-visit to the Bahamas.

While some of our fellow Bahamians wait for things to return to normal, there are some other Bahamians who have sought to suggest to a skeptical public that no such return is in the offing.

These people routinely call on the authorities to do what they have to do so as to help our people as they do their level-best to get through these hard times.

The Bahamian people can and should – with the help of appropriate labour – produce more of the food its people consume.

May 5th, 2011

The Bahama Journal Editorial

Bahamas Blog International

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.

Bahamasair Board plans to sue Shell Bahamas Limited

Bahamasair Suing Shell

By Candia Dames

candiadames@hotmail.com

02/02/2004

Bahamasair's board plans to sue Shell Bahamas Limited, claiming that the oil company has been unfairly charging the airline for use of its pipeline needed for refueling planes at the Nassau International Airport.

 

The Journal has learnt that the airline's attorney, Damian Gomez, recently presented a writ to commence the action against Shell, but the board was not pleased and asked him to strengthen the document.

 

An airline official said that should the board be successful in its actions, "the fuel bill would go down considerably."

 

The airline continues to pay Shell for fuel as well as for use of the pipeline or hydrant system that provides the fuel.

 

An earlier Journal report that revealed details of the dispute points out that the development of the hydrant was initiated by the former government in an attempt to reduce congestion on the ramp, caused by all the service vehicles around an aircraft at any given time.

 

This development reportedly was supposed to offer multiple fuel pits at each gate with an extension around the Family Island pier having small fuel carts at each gate eliminating the need for huge fuel trucks maneuvering around the aircraft.

 

The fee was introduced by the members of the consortium Esso, Shell and Texaco in 1995 after the redevelopment of the hydrant system at Nassau International Airport. Initially it was referred to as a hydrant fee, intended to recover the investment of $2.8 million spent to develop the system.

 

But Bahamasair officials say that they should not have to pay this refueling charge because Shell has already recovered the investment. They claim that the airline has been charged wrongfully to the tune of at least $1 million.

 

The airline official said, "It's important that we do anything we can to cut costs."  He claimed that the fee actually amounts to about $600,000 a year and Bahamasair should not continue to pay it.

 

But a Shell source pointed out that the gas company has to continue to pay maintenance charges for the airport facility.

 

"Bahamasair fails to understand that Shell has to make a profit," he said.  The board will undoubtedly face strong opposition from Shell as it proceeds with its action.

 

The board also reportedly wants fuel prices to be reduced, but the airline source said the main action at hand involved recouping the money Bahamasair paid to Shell that it should not have paid.

 

In an earlier interview with the Journal, Shell's attorney, Campbell Cleare, said that Shell would probably have been willing to reduce the cost per gallon of its gasoline to the airline by one or two cents. But he said at the time that Bahamasair was demanding as much as a 10 cents per gallon reduction, which would result in a loss to Shell of over $1 million per year.

 

Mr. Clear told the Bahama Journal then that, "This is not price gouging. The prices are reasonable. Shell deserves to make a reasonable profit. There's absolutely no other carrier that's complaining. Bahamasair is trying to squeeze Shell into an unfair position."

 

Bahamasair officials declined to go on the record late last week regarding their planned action before the courts.

 

The board has been taking a number of measures geared at saving the cash-strapped flag carrier millions of dollars. The battle against Shell is seen as one avenue for helping to trim expenditure and ease Bahamasair's burden on the taxpayers' purse.