Poor Bahamians region's hardest hit by fuel hikes


Tribune Business Editor


The poorest 40 percent of Bahamian society are among the hardest hit in the Latin American and Caribbean region by any increase in fuel prices, an IDB study has found.

The newly-released Inter-American Development Bank (IDB) report, which analyses the impact of energy taxes and subsidies in 11 countries, found that only Ecuador suffers a greater total "welfare loss" than low income Bahamians when gas and diesel prices rise by as little as 25 cents per litre.

Bahamians among the poorest 20 percent of society sustained a loss equivalent to 2.4 percent of their income, while those in the next-highest bracket endured a 2.5 percent decline, according to the report's findings.

"The indirect impact of gasoline and diesel price rises on household welfare tends to be regressive," the IDB study and its five authors found. "Increasing the cost of gasoline and diesel imposes a relatively higher welfare cost on poorer households than on wealthier ones in every country in our sample.

"The indirect effect of the price hike on the lowest quintile (20 percent of society) ranges from 0.7 percent of a household's budget in Uruguay to over two percent in The Bahamas."

The results highlighted The Bahamas' ever-growing vulnerability and exposure to rising, volatile global oil prices as a result of its near-100 percent dependency on fossil fuels. For the 25 cent per litre rise in fuel costs was shown to result in energy cost increases that were more than three times' higher, in percentage terms, than any other country in the Latin American and Caribbean region.

The IDB study showed electricity prices in The Bahamas would increase by 36 percent in such circumstances, with the next highest increase being Ecuador's ten percent. Transportation costs were also forecast to rise by 7.9 percent.

"Electricity is also significantly affected by the price increases, especially in the Caribbean and other countries where power generation relies heavily on petroleum products. For example, electricity prices increased by 36 percent in The Bahamas and 8.6 percent in Barbados."

Breaking household consumption down into categories, the study found that 38 percent of the impact on Bahamian society's poorest 20 percent from such a fuel price hike was felt in their light bill. Household services and gasoline/diesel purchases felt 16 percent and 12 percent of the impact, respectively.

"In all countries except The Bahamas, Barbados, Costa Rica and Guatemala, the main vehicle through which diesel and gasoline price hikes decrease the welfare of the bottom quintile is higher public transportation costs," the authors wrote. "In The Bahamas and Barbados, ensuing electricity price increases are the most important factor affecting the poorest households."

The study also modelled the effects of a $0.05 cents per kilowatt hour (kWh) increase in electricity prices themselves. This found that the poorest 20 percent of Bahamian society would suffer a welfare loss equivalent to 1.5 percent of their income, and those in the next bracket up a 1.4 percent loss.

This illustrates how even the smallest increase in energy costs results in a cut to living standards, purchasing power and disposable income among those segments of Bahamian society least able to afford it. Those on higher incomes are better able to absorb the impact.


DDK 4 years, 6 months ago

What do they expect with VAT on Fuel Surcharge?????? We must have the most stupidly structured full bills in the Whole Wide World from one of the most inefficient, corrupt electric corporations in the Whole Wide World!


bogart 4 years, 6 months ago



TheMadHatter 4 years, 6 months ago

Sounds like an IDB advertisement for our Government to borrow like $50m for some solar panel thing or LNG thing or any kind of thing to throw at the problem.

Mr Prime Minister, please tell them what they can do with their loan money. We don't want it, not even at 0% interest.

These people are only in the business of creating financial slaves.


bogart 4 years, 6 months ago

Bulk of fuel prices ...is taxes to govt....people in govt bureaucracy....erry ministry needs to be accountable for the continual big time wastage of taxes....in half baked projects....gross inefficiemcies....blatent ineptness....slackness...irresponsibilitoes...lack of duty of fiduciary care....NOONE ACCOUNTABLE NOONE FIRED...,!!! ..ONE govt gets elected an Minister tells them to go right an they shutup and goes right.........MEXT govt gets elected..an Minister says we goes sideways...an dey follows...NEXT. Minister comes long an says we goes upwards..dey does that.......AND MINISTER DOES NOT GET REELECTED.....BUT ...SAME OFFICIALS SILLL THERE.....THERE MUST BE PUNISHMENTS...DISINCENTIVES....DISCOURAGEMENTS....TO THESE OFFICIALS.....WID SO MUCH SLACKNESS....STILL COLLECTING SALARIES.....AN DISRESPECTIVEFULLY.....FORCING PORE...BAHAMIAN..TAXPAYERS....TO ....BLEED MORE MONEY FOR THEIR SALARIED...INEPTNESS....only the Minister gets punished by not getting reelected.....but will be celebrated with a STATE FUNREAL....an high accolades...when dey cross Jordon now....aint no lie bout dat......


bogart 4 years, 6 months ago

@ThisisOur...erry body an their mama done talk bout VAT from the get go...that it catches we many pore at the bottom worser than the top.....One good thing is that Govt Roc wid Doc ....has stated that thrre will be no more VAT increases for now...which is a excellent news .....to we the pore.......but there is aleays the unpredictable and necessary handling of those future expenses of the nation ...for which other means of obtainng funds to .pay them...kudos to IDB....to tell then.....not to try raising money by fuel increases.....What dey needs to do is to sort out all the planets illegal chillren from coming to the Bahamas for free schooling....without being fully questioned by Immigraton an National Security as to whether Bahamian Constitutional Laws are thus being broken....!!!!!..an take money saved to pay to fix the airconditioning at PMH so Bahamians can have surgery...an pay Bahamian medical staff who aont get no pay increase for decade mow.....!!!?!


sheeprunner12 4 years, 6 months ago

If it is hard for Nassau and Freeport ppl ............... imagine how hard it is for Out Islanders where the markup on consumer goods is at least 25% higher than the city.


TheMadHatter 4 years, 5 months ago

Bogart you standing up for Bahamians again? Govt ga soon deport ya boongie. LOL


bogart 4 years, 5 months ago

@Madhatter......see laterst CENTRAL BANK QUARTERLY REPORT.........Guardian papers ........COST OF LIVING GONE UP 1.2% ................SHOWN IN RETAIL PRICE INDEX....dey collects tabulates....figures fron EVEN from quarter before July 1 when dey putup VAT increase.....mudda tek sic dred......gas na diesel....raise like 8 plus% an 12plus%.....meaning...erryting gone ups like lectricity....water.....only ting like least increast is medical service ....give Doc credit....an...tobbacco....smokers mussey gone home grown..


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