Finance Minister Clarifies Government's Position on Fuel Prices in Antigua and Barbuda

The international price of oil has declined steadily over the past 7 months moving from a high of US$147.00 per barrel in July 2008 to just under US$40.00 per barrel at present. Although prices have generally been trending downwards there have been some fluctuations in the price of oil in recent weeks. The recent fluctuations notwithstanding, the gener al downward trend in prices has indeed been a welcomed development. In direct response to this, the Government has made several adjustments to the retail price of gasoline and diesel over the past several months. At present, the retail price for a gallon of gasoline is $9.95 and diesel is 10.95.

Over the past two weeks it has been suggested by the Antigua Labour Party in the media and elsewhere that the recent declines in the price of gasoline is not sufficient to reflect the downward trend internationally. Further, it was suggested that the price of gasoline is lower in other OECS countries, namely Dominica and St. Kitts and Nevis, and therefore this Government is placing undue hardship on the citizens of Antigua and Barbuda. It is against this backdrop that I would like to briefly look at price adjustments in Antigua and Barbuda as compared to other OECS countries from December 2006 to present.

In December 2006, the price for a barrel of oil on the international market was approximately US$61.00. In the same month, the retail price of gasoline in Antigua and Barbuda decreased by $0.50 to $11.49 and the price of diesel fell by $0.45 to $9.99. These prices remained unchanged until April 2008 when the price of gasoline was increased to $12.95 and diesel rose to $11.95. At this point the average price for a barrel of oil rose by almost 80.0 percent to US$109.00. In the other OECS countries the average price for a gallon of gasoline and diesel was $13.68 and $13.57 respectively. In particular, the price of gasoline and diesel in Dominica was $13.71 and $14.14 respectively. In St Kitts and Nevis, where there are three different entities that retail petroleum products, the price of gasoline averaged $13.95 and ranged from $13.70 at Delta Service Stations to $14.12 at Shell Service Stations, while diesel was retailed for $14.41.

The next price change in Antigua and B arbuda took effect in the month of May 2008. During the month of May 2008 the average price for a barrel of crude oil increased to US$122.75 and the retail price of gasoline and diesel in Antigua and Barbuda was increased to $13.95 per gallon. At this price level the Government was subsidising the price of gasoline and diesel by about $3.8 million per month. In the other OECS countries the average retail price of gasoline and diesel was $14.29 and $13.98 respectively. In Dominica, the price of gasoline was $14.61 and the price of Diesel was $14.78. In St Kitts and Nevis the average price of gasoline was $15.71 and the price of diesel was $12.75

Over the next two months (June and July) the international price of oil continued to grow at a rapid pace reaching record levels on a daily basis and peaking at US$147.00 in July 2008. OECS countries continued to import fuel at these high prices until August 2008. During this period the retail price of gasoline and diesel remained fixed at $13.95 i n Antigua and Barbuda while a number of the other OECS counties continued to increase prices - on a weekly basis in some cases. In Antigua and Barbuda, the Government continued to subsidise the retail prices of both commodities by more than $4.5 million per month. During the month of July for example the average retail price of gasoline and diesel in the other OECS countries was $15.24 and $14.89 respectively. In Dominica, the price of gasoline was $15.69 and the price of diesel was $15.97. In St Kitts and Nevis, the average price of gasoline was $17.17, with prices ranging from $16.18 at Texaco Service Stations to $18.59 at Delta Service Stations, while the price of diesel was $14.55

In October 2008, with the international price of oil declining but not yet reflected in the imported prices of petrol as a result of the time lag associated with the refining process, the Government of Antigua and Barbuda began to reduce the retail price of gasoline and diesel. In October 2008, the retail price of gasoline and diesel was reduced to $13.65. The price of both20commodities remained significantly above $13.65 in a number of OECS countries. In Dominica and St Kitts and Nevis in particular, gasoline was retailed for more than $14.00 per gallon, and at Delta Service Stations in St Kitts the price of gasoline was $16.81.

In a number of OECS countries the price of gasoline and diesel has declined significantly between October 2008 and January 2008. At present the average price for gasoline and diesel in OECS countries is $9.81 and 10.82 respectively. In Dominica, the retail price of gasoline is $9.09 and the price of Diesel is $10.04. In St Kitts and Nevis, the average price of gasoline is $9.19 with prices ranging from $8.33 at Texaco Service Stations to $12.24 at Delta service Station. The current price of diesel in St Kitts and Nevis is $14.10.

With respect to Liquid Petroleum Gas (LPG) the price of this product remained unchang ed in Antigua and Barbuda over the past five years and throughout the oil crisis. At $20.95 and $108.00 for the 20lb and 100lb cylinders respectively, Antigua and Barbuda has the lowest prices in the OECS for this commodity. At present, the average price for the 20lb and 100lb cylinders of LPG in the other OECS countries is $35.86 and $172.57 respectively.

In the month of July when the international price for oil peaked at US$147.00 the average price for a 20lb cylinder of LPG in the other OECS countries was $40.27 with prices ranging from $30.00 in St Kitts and Nevis to $59.00 in Anguilla. In Dominica, the price for the 20lb cylinder was $44.10. During the same month the average price for the 100lb cylinder in the other OECS countries was $192.89, with prices ranging from $175.00 in St Kitts and Nevis to $220.00 in Anguilla. The price for the 100lb cylinder was $215.50 in Dominica.

Price changes for gasoline and diesel in Antigua and Barbuda is partly correlated to the timing of purchase and shipment. Thus, price difference may exist between OECS countries because of differences in timing with respect to when stock becomes exhausted and new shipments are received. The Government will continue to monitor international prices and adjust the retail price of gasoline and diesel accordingly to ensure that the residents of Antigua and Barbuda continue to benefit from the price reduction on the international market. In addition, we will continue to heavily subsidise the price of LPG as a part of the Government overall social programme.