By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Bahamians must brace for “a very expensive summer”, the Chamber of Commerce’s chief executive warned yesterday, as global oil prices surged to $80 per barrel.
Edison Sumner told Tribune Business that greater renewable energy penetration and usage “can’t come soon enough”, with no Bahamian or business able to escape the impact of energy costs that are forecast to soon exceed $100 per barrel.
Virtually all companies and households will feel the impact in their Bahamas Power & Light (BPL) bills and at the gasoline pump, resulting in reduced profits and disposable incomes, respectively, and higher costs of living.
Mr Sumner said there was little most Bahamians can do to mitigate the immediate impact, other than focus on energy conservation, as he renewed private sector calls for a regulatory framework that will better spur more rapid take-up of renewable energy technologies.
The Chamber is itself moving to improve access to renewable energy financing, with Mr Sumner disclosing it will shortly unveil an initiative to help persons fund the installation of roof-top solar panels.
In the meantime, he urged energy consumers to “use only what you have to’, reiterating that it could be “a long, hot summer” with the Bahamas totally at the mercy of oil-producing countries and global political developments.
“I think we ought to be extremely concerned about it, especially given that all our energy sources currently are fuelled by oil,” Mr Sumner told Tribune Business, after Brent Crude - the major global price index - hit $80 per barrel yesterday.
“This means the cost of purchasing oil is going to increase substantially for BPL,” he added. “As a result of that we are likely to see a significant increase in the fuel surcharge and energy bills.”
Mr Sumner said the impact may not be felt immediately, as the timing depended on when the nationwide energy monopoly did its fuel purchases. He also questioned whether BPL employs any ‘fuel hedging’ or ‘forward buying strategies’ to mitigate the impact.
Darnell Osborne, BPL’s chairman, yesterday confirmed that the state-owned utility currently has no ‘fuel hedging’ or other strategies in place to minimise its exposure to rising global oil prices.
Suggesting that the Board had been focused on other elements of BPL’s restucturing, Mrs Osborne told Tribune Business: “It’s something we have discussed. We’ve had discussions with investment institutions on it, but it’s not been put in place at the moment.
“Because there’s so much to do we haven’t got to finalising that yet. It is something we’re looking to do, even though we’re looking to move to LNG”. The Government’s confirmation of Shell North America as BPL’s long-term generation partner will be of little use in the short-term, given that the new liquefied natural gas (LNG) power plant will not be completed until 2021.
“We need to start thinking about hedging,” Mrs Osborne conceded, adding that the proposed “tri-fuel generation” offered by the new plant will enable BPL and its partner to source whichever fuel was cheaper at a given moment.
The BPL chairman pointed to the utility’s small-scale renewable generation programme, which allows consumers to sell excess power back to its grid, as one example of efforts to mitigate rising energy costs.
Yet she acknowledged that “not everybody can afford it”. For New Providence, Mrs Osborne said BPL was working to complete “overhauls” and get its Clifton Pier plant fully operational, in a bid to reduce reliance on Blue Hills and its more expensive diesel fuel.
Grand Bahama Power Company (GBPC) clients are better placed to weather the impact, as that island’s utility does employ fuel hedging strategies as part of a strategy intended to hold energy rates at their current level until 2021.
But with BPL, in particular, automatically passing increased fuel costs on to its customers, Mr Sumner warned that “consumers will be the ones to bear the brunt” of rising oil prices.
Many analysts predicted that prices will continue to rise past $100 per barrel, driven by supply cuts from key Oil Producing and Exporting Countries (OPEC) members, particularly Saudi Arabia and Russia.
Much of the world’s oil reserves are located in volatile and politically unstable regions, such as the Middle East and Venezuela, and Donald Trump’s decision to withdraw the US from the Iran nuclear deal has helped spark this week’s price surge amid fears of supply interruptions following the renewed imposition of sanctions.
“It would appear, based on comments coming from the OPEC countries, that we should expect to see some increase in the [BPL] fuel charge over the coming months,” Mr Sumner said. “It’s not ood
The global oil price increase is especially ill-timed given that it coincides with the summer season, when energy consumption by Bahamian businesses and households peaks as a result of increased air conditioning use.
It also represents another so-called ‘downside’ risk to Bahamian economic growth, which was projected to hit 2.5 per cent this year - its highest level for at least a decade.
Chamber working on an inititaive,
described energy prices as “one of the vexing issues”
Comments
bahamas12345 5 years, 11 months ago
To bad we cant be like Grand Bahama and lock in fuel prices instead of getting beat on all the time. I guess BPL/BEC or the Govt cant see how to save anything for the people "Grand Bahama Power Company (GBPC) clients are better placed to weather the impact, as that island’s utility does employ fuel hedging strategies as part of a strategy intended to hold energy rates at their current level until 2021"
proudloudandfnm 5 years, 11 months ago
I pray 80 bucks a barrel is enough to rekindle Freeport's maritime industry.
Porcupine 5 years, 11 months ago
True "hedging" woud include protecting ourselves from the varagies of the political and economic stranglehold the elite have on us. We can find the money, borrowing it to bail out our banks, and of the many other failed enterprises. Yet, when it comes to sustainable business costs and our quality of life, or even being able to pay for the necessities of life, we cry poor mouth. What is needed this week is a major commitment and plan to go entirely renewable. Solar, wind, and tidal power are already economically sensible. Not to mention it would be a huge step towards true national independence. Start with an unequivocal goal, plan and execute. This is an all-important issue for us all.
DDK 5 years, 11 months ago
BEC/BPL fuel hedging = fuel surcharge + VAT!
John 5 years, 11 months ago
Well they’ve been fighting like hell to get oil up to $100 a barrel ever since the market collapsed. And there is no shortage of oil or alternative fuels. If fact pill finds in the billons of barrels haven found in The Caribbean, South America, Syria and other Middle Eastern countries. And there’s still restrictions on Russian oil.. The Bahamas had several years to reduce its dependence on oil for energy. It did nothing. At least motorists have switched to fuel efficient vehicles. The little Japanese gremlins can be seen all over Cable Beach and even in Old Fort Bay and Lyford Cay now.
John 5 years, 11 months ago
And now there’s forecast for early activity in the hurricane season. There may be a tropical development as early as next week.
TheMadHatter 5 years, 11 months ago
Neither PLP nor FNM would appoint Graham as Minister of Energy and Environment. Now it's time to pay the piper.
joeblow 5 years, 11 months ago
Its amazing that even when the prices of oil were the lower they have been for many years there was no significant change in prices at the pumps (which is the next place people can't seem to get relief). You just can't win the game is fixed!
OMG 5 years, 11 months ago
Why are we paying these incompetent managers? Fuel hedging or buying in advance (the airlines do it) makes so much sense when the price of oil was so low and even an imbecile would see that it had to rise in the future but " were working on it". Yes but you have missed a golden opportunity.
sheeprunner12 5 years, 11 months ago
The price of gas in most Family Islands are generally 50% to 100% more expensive than in Nassau ......... If you are on islands where it is sold from 55 gallon drums, expect to pay $10.00 per gallon now ......... The Government is the biggest culprit as this is a huge tax revenue earner.
TheMadHatter 5 years, 11 months ago
We are so used to getting the short end of the stick - that this doesn't even matter anymore.
sheeprunner12 5 years, 11 months ago
If the USA is flooding the international market with cheap oil and OPEC is in a quandry to deal with the shale oil fields and fracking of Canada and USA ........... and Trump has cut off Venezuela as a real viable oil player ....... why is the global price of oil going up?????
REMEMBER:.The Big Three (Rubis, Focol/Sol, Esso) purchase mainly American oil products.
Answer ......... Wall Street price fixing and China vs Trump trade row???????
realitycheck242 5 years, 11 months ago
You missed out the Russian effect on world oil prices, Russian supplies 12.6 % of the total. The US follows with 12,2%. OPEC leader Saudi Arabia leads with 13.4% of the total. world supply.. Russia president Putin has signed an agreement with the Saudi's to cut back oil production. That is the main reason for the rise in global prices..Russia needs the price to go up to boost its economy.. Sanctions from the west has caused Russia to cut back on military spending.
realitycheck242 5 years, 11 months ago
The good news for mother Earth is In 2012, the world relied on renewable sources for around 13.2% of its total primary energy supply. In 2013 renewables accounted for almost 22% of global electricity generation, and the IEA Medium-Term Renewable Energy Report 2015 foresees that share reaching at least 26% increase in 2020. The improtance of oil as a energy supply is decreasing as the years pass.
sheeprunner12 5 years, 11 months ago
Is Renewable Energy sources trending in a positive direction in The Bahamas???? ....... Will BPL free the Out Islands to invest in 100% RE????
realitycheck242 5 years, 11 months ago
The Bahamas moving at a snale's in the area of renewables. One year after the gov promised to make a small island like Ragged Island 100% solar and renewables. we have yet to get an updated report. Countries like Costa Rica now gets 99% of their electricity from renewable sources. Countries like Iceland and Ethiopia are at 100%. We need a renewable energy policy with a plan and objective timetables with deliverable dates. That's what other countries are doing. Big countries like China is at 25% and the USA is at 14%.we maybe still below 2%. Putting LNG at clifton is a step in the right direction but even that source is not considered renewable Our neighbor Cuba who is still facing an embargo is around 4.2% in renewables. . The world is eating our lunch in this area.
sheeprunner12 5 years, 11 months ago
Sounds like the Bahamian Government needs to go cold turkey ........ and let all consumers who want to do so, install their RE systems and give rebates or allow BPL to buy excess from the homeowners or businesses.
Damifiknow 5 years, 11 months ago
What happen to doing away with the vat Mr Minnis You aren’t Rocking with that ?
laallee 5 years, 11 months ago
Now here's a thought- Why not drill for oil and gas? Bahamas Petroleum have done all the legwork, get behind them and you might be self reliant for all your energy needs!
bogart 5 years, 11 months ago
The Bahamas is surrounded by so many energy sources which goes to waste.
One of the best is using the tidal current. Simply go to Potters Cay and look at the flow of the water. Simply put some paddle wheels, turbines reduction gears to move the shaft of generators have controls to regulate and batteries....basically a wind turbune turned upside down...... Every Bahamian island can use various means to capture tidal action which is as sure as the sun.....to generate energy.... Just as the illegal Haitian Human traffickers can move 100 plus illegals on a boat by wind ...just the same way wind can be captured to move turbunes and reduction gears to generate energy......perhaps we need to get some illegal Haitian engineers to devise a wind energy devise.......instead the current trend is to follow other land locked nations and copy their solar generating devices....and of course create jobs for the ferreigners ....
Sign in to comment
Or login with:
OpenID