• Family Island Chamber chiefs say costs ‘crazy’
• Economic activity countering expense surge
• But inflation ‘at back of everyone’s minds’
By NEIL HARTNELL
Tribune Business Editor
Family Island Chamber of Commerce presidents yesterday described soaring gas prices as “the silent killer” for economic activity, with one branding current pump costs as “crazy”.
Both Ken Hutton, Abaco’s Chamber head, and Thomas Sands, his Eleuthera counterpart, told Tribune Business that while the continuing post-COVID rebound was helping to offset the fall-out from stubbornly high global oil prices they were unsure when the situation might become “untenable” and a tipping point reached.
Family Island gas and diesel prices are typically around $1 per gallon more expensive than in Nassau, due to the extra freight and logistics costs involved in maintaining supply. Mr Sands said high gas prices and wider inflation fears were “at the back of everyone’s mind” on Eleuthera because rising costs simply make it “more difficult to make ends meet”.
And Mr Hutton again lamented that Family Island Chambers had not even received an acknowledgement from the Government in response to their proposal to ease the burden for consumers and businesses by capping the per gallon 10 percent VAT levy at 45 cents.
While some have suggested that imposing such a cap would create relatively insignificant savings for consumers, measured in cents per gallon, current gas prices in New Providence and the Family Islands place the present VAT take at around 70 cents or higher - a level some 55.6 percent above the Chambers’ proposed cap.
“There’s optimism because the economy is moving. The Disney project is moving forward, which is generating some cash flow and activity in the community that has not been there for a while,” Mr Sands said. “But, while people are optimistic, the price of gas is just crazy. It is $7.41 a gallon. Crazy.
“Because construction is going on, there’s people out of necessity moving up and down but it may have gotten to the point where people are trying to be more efficient with their time and their movement. People are very conscious of it. It hasn’t slowed the economy at this particular point in time but it’s at the back of everybody’s mind and, if it continues to go north, I don’t know what it does.
“At this point, people are still moving and doing what they have to do. They’re just complaining about it.” Oil prices remained stubbornly high on world markets last night, standing at $110.7 and $114.1 per barrel on the West Texas Intermediate and Brent Crude indices, respectively. For New Providence, gas prices ranged from $6.97 per gallon at Shell to $7.339 at Esso, while diesel prices are between $6.24 per gallon and $6.68.
Surging gas prices and transportation costs are eating into both consumer income and business revenues. Besides fuel, inflation is impacting Bahamians at food stores and across-the-board, with the greatest effects felt by persons on fixed incomes (pensioners) and those in the lowest-earning segments of society who are unable to absorb the higher expenses.
“The cost of everything is going up,” Mr Sands said. “We have people complaining about it on a regular basis and people are very conscious of it. The in-between saving grace at this point in time is there’s an increase in economic activity, and people have gone back to work after going through COVID, there is employment and employment opportunities but, as prices increase, the more difficult it becomes for people to make ends meet at the end of the day.
“There is a lot of discussion around it, a lot of fears around it. It’s definitely on the minds of everybody. Nobody knows where it will end and how it will end. I just hope the economy continues to recover at the very least, helping us to hold on.”
Mr Hutton, meanwhile, said diesel prices last week stood at around $6.75 on Abaco with gasoline around $7.80 per gallon. “The price of fuel is the silent killer that really hurts everybody right now,” he told Tribune Business. “It’s everywhere you look. It’s not like there’s anything unexpected or special going on here right now. It’s just unfortunate we continue to eat it.
“Everyone is just hunkering down and living with it right now. There’s no real negative sentiment out there. Everyone’s just getting on with it for now. There’s not a lot people can do anyway and we’re just moving forward. I don’t know at what point the situation will become untenable but we’re not there yet.
“It would be exceedingly helpful if the Government took the suggestion of the Out Island Chambers from March to cap the VAT at 45 cents per gallon. We didn’t even get an acknowledgement. March 9 is when we put the suggestion in. We saw this price increase coming.”
Mr Hutton described lumber costs as “the outlier”, with prices having dropped between 30-40 percent since the start of 2022, something he attributed to a US housing market slowdown as interest rate hikes bite. This, in turn, has freed up supplies to The Bahamas and will help with Abaco’s post-Dorian reconstruction.