The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian consumers overpaid for cooking gas for 2015’s first 10 months, an outspoken businessman asserted yesterday, arguing that this showed why “archaic” Price Controls needed to be abolished.

Dionisio D’Aguilar, whose Superwash laundromat chain is one of the Bahamas’ largest liquefied propane gas (LPG) consumers, questioned why it had taken so long for the Price Control Commission to ensure local prices more accurately reflected those on the global market.

Mr D’Aguilar said global LPG spot prices, as measured by the Mont Belvieu Index, had dropped by more than 50 per cent year-over-year, falling from an average $0.87 per gallon in the final week of October 2014 to around $0.42 this year.

He added that global LPG prices had started 2015 at $0.47 per gallon, meaning that while there had been little change year-to-date, Bahamian consumers had been robbed of the potential benefits from lower global prices for 10 months.

As a result, Mr D’Aguilar suggested that it was incredible for E. J. Bowe, the Price Control Commission’s chairman, and its other members to “brag” about last week’s LPG price reduction when they were around a year late.

“It’s been at this price since January this year,” Mr D’Aguilar told Tribune Business of the relatively stable global LPG costs, as measured by the Mont Belvieu Index.

“What’s taken so long? This is why Price Control doesn’t work. It only insulates consumers when prices come up, but it causes consumers to pay way more when it goes down.

“Price Control is an archaic and artificial price setter, while the market could do far better with suitable competition.”

Mr D’Aguilar’s comments likely reflect the views of many in the private sector, who view Price Controls as an outdated consumer protection mechanism that is past its sell-by date.

Particularly in industries where there is ample competition, Price Controls are seen as distorting the market while failing to timely reflect changes to global pricing and conditions that impact the Bahamas.

When it came to LPG, Mr D’Aguilar said that should the Government persist with Price Controls, it needed to instead focus on setting dealer margins and tie Bahamian prices to those on the Mont Belvieu Index - just as did with auto gasoline prices.

This, he argued, would ensure that Bahamian LPG prices reflected, and responded to changes in, global pricing. It would also remove decision-making discretion from the Price Commission’s hands.

“The Bahamian consumer has been raped for the whole of this year. For 10 months they’ve been paying way more than they should,” Mr D’Aguilar told Tribune Business.

“I don’t know why we put up with Price Control. It’s so silly. It [prices] should have been like this since January. The Bahamian consumer has been overpaying for propane for all of this year.

“The wholesalers [dealers] get screwed when the price goes up, and consumers get screwed when prices go down. Everybody along the chain gets screwed at some point. It really makes no sense. Tie it to the spot price and control the margins.”

Mr D’Aguilar described Price Controls as “archaic and asinine rules that the Government can’t seem to do away with. It’s why the country is in such a mess; they seem incapable of doing away with something”.

He argued that Mr Bowe and his department “should have been sent home” or redeployed to other areas such as crime fighting, describing the “bragging” over last week’s LPG price reduction as “stupidity” given its lateness.

Mr Bowe last week admitted that Bahamian consumers had waited “too long” for an LPG price decrease, and pledged that the Commission would now assess it on at least an annual basis.

“What we plan to do going forward is have a review every year, rather than every 10-15 years, to have a look at the prices,” Mr Bowe told Tribune Business then.

“Over the past years, the price of fuel was falling and falling, and the dealers themselves had approached the Price Commission some time ago to say there was room to make cuts to the consumer.

“We will certainly look at it at least once a year. It will be similar to the gas and diesel. That is done on a regular basis, and the LPG gas will not be done as frequently as that.”

Shane Gibson, who has ministerial responsibility for price control, told Tribune Business back in February that the Government was “definitely considering” cuts to LPG prices. And Mr Bowe said the Price Control Commission was also developing recommendations to go to the Government back then.

At that point, there had been a 67 per cent fall in spot LPG prices on the world and US markets. Based on the Mont Belvieu index, LPG per gallon prices had fallen from $1.695 on February 10 last year to $0.56 per gallon at the same time in 2015.

The Value-Added Tax (VAT) inclusive price for a 100 pound LPG cylinder on New Providence and Grand Bahama has now dropped by 16.3 per cent - from $107.5 to $90.

That is a $17.5 savings, and on the Family Islands the price is being cut from $118.25 to $100 - a drop of 15.4 per cent.

The wholesale LPG price for a 100 pound cylinder has dropped to $60 in New Providence and Grand Bahama, and $70 on the Family Islands.

By the gallon, LPG retail prices are now $3.81 in New Providence and Grand Bahama, and $4.24 in the Family Islands.

The supplier/wholesale prices are $2.52 per gallon on New Providence and Grand Bahama, and $2.97 per gallon in the Family Islands.