GOVERNMENT yesterday announced a 30% reduction in the price of gasoline and diesel and a 42% per cent drop in the price of kerosene at all GUYOIL outlets with effect from last night.At a media briefing yesterday afternoon, Finance Minister Dr. Ashni Singh disclosed that the price of gasoline has been reduced from $995 per gallon to $695 per gallon; the price of diesel reduced from $985 per gallon to $694 per gallon and kerosene from $850 per gallon to $496 per gallon.
The new prices mean that prices have dropped to where they were in 2009.

Finance Minister, Dr. Ashni Singh has expressed optimism that other fuel outlets other than GUYOIL will follow suit with similar reductions on the prices of gasoline, diesel and kerosene.

The Minister explained that in keeping with the mechanism to adjust taxes on fuel, gasoline will now attract excise taxes at a rate of 50% and diesel at a rate of 42% with effect from January 20.
There will be no excise taxes charges on kerosene.
During the media briefing at NCN’s office on Homestretch Avenue, Dr. Singh disclosed that the price reductions had been made by Government within the context of falling prices of crude oil in recent months.

The Private Sector Commission is hopeful that the reduction in fuel prices will be passed onto the average consumer in the form of lower costs for transportation and other goods and services.

He said that Government had been initially hesitant in reducing the prices because of the known volatility of crude oil prices.
“We had to be assured that it was a sustained reduction. We don’t move prices on every occasion when there is a rise or a drop on the international market,” he said.
He explained that traditionally Government has been operating a long-standing and well-functioning mechanism under which the price of fuel is regulated so that the ad valorem tax rate is adjusted downwards when the world market price for fuel moves upwards.
The system adjusts upwards when the world market price for fuel moves downwards.

CUSHIONED CONSUMERS
This mechanism has cushioned consumers from spikes in the world market price, protecting them from exorbitant price fluctuations when the world market prices reflect high volatility.
He said, for example, that between December 2008 and March 2012 the world market price for crude oil had increased by 184% but the price for a gallon of gasoline in Guyana only increased by 77%.
“This was achieved by Government lowering the tax rate on gasoline in keeping with the regulatory mechanism over that period.” This has led to stability in prices over recent years.
Dr. Singh expressed optimism that other fuel outlets other than GUYOIL will follow suit with similar reductions on the prices of gasoline, diesel and kerosene.
GUYOIL outlets will now get the rush but the hope is that the market forces will force the other distributors to follow suit,” he said.

RATES FOR COMMUTERS, CUSTOMERS
He also expressed hopes that operators in the land and river transport sector will reduce the rates charged to commuters in keeping with their reduced costs of operations.
He said that Government has no appetite for price controls at the moment but he would not rule out this possibility.
He said that the emphasis will be placed on persuading operators and businesses benefiting from the price reductions about their moral obligation to reduce their rates to commuters and customers.
Many of the stakeholders in the business community and other productive sectors such as the gold mining sub-sector were unavailable for comment last night.
But the Private Sector Commission which has been lobbying for this development since November last has welcomed the reduction in fuel prices
Chairman of the PSC, Ramesh Persaud said last night that the Private Sector Commission wished to express its appreciation to the Minister of Finance for his timely intervention in reducing the price of fuel by almost 30%.
The Private Sector Commission, he said, had appealed for an adjustment in local prices at the pump as world market prices plunged and is grateful that its appeal was heard.

SIGNIFICANT BOOST
This move will provide a significant boost to industry, especially our manufacturers, and comes at a time when the effect of weak commodity prices is impacting the economy.
The Private Sector Commission is hopeful that the reduction in fuel prices will be passed onto the average consumer in the form of lower costs for transportation and other goods and services.
Crude oil was being sold for less than US$50 per barrel on the world market yesterday.
Reliable sources disclosed that the sharp decline in the price for crude oil on the world market is primarily due to a current state of oversupply propelled by the massive increase in the US shale-oil production; Libya’s quick return to oil production; Iraq’s steady supply of oil for the market, and the refusal of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, to reduce production.

(By Clifford Stanley)