The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Bahamas Petroleum Retailers Association's (BPRA) president, Raymond Jones, said production cuts in the Organization of the Petroleum Exporting Countries (OPEC) are behind the rise in prices at the pump, which he said underscores the need for a margin increase for retailers as they “can’t contain this anymore".

Raymond Jones told Tribune Business that the oil cartel cut production in April, which is now trickling down to the average consumer at the pump. “This is a global phenomenon and these things happen. It’s out of our control, but OPEC cut production a while back and so we are now seeing the fallout from that.”

Raymond Samuels, managing director of Rubis Caribbean, confirmed the same in a short note to Tribune Business on the sharp rise in gasoline prices, which have jumped to more than $6 in the space of two weeks.

Mr Jones took the opportunity to remind the public that these oil price hikes are not something that they make any money off of, and in fact retailers end up doing more work for the same amount and often times less than when prices are low.

Mr Jones said: “The increase in price costs us more money for overdraft fees for everything we do and so working with margin, that's insufficient to give us profitability, especially with an increase of almost 75 percent on utility bills and now power has gone up. Minimum wage has gone up earlier in the year and we have been asking the government constantly to entertain an adjustment in our fuel margin to give us the ability to stay in business.”

The government had given petroleum retailers a rebate worth approximately $6m but it is not a long=term fix for when oil prices start to rise like how they have been in the last few weeks. “All we want is 25 cents added to the margin,” Mr Jones opined.

He added: “They gave us a proposal back in March, we accepted it. We said okay, fine, we can do we can use and that proposal included also an increase for the wholesalers and on top of that, we asked them this and let's sit down and put in an implementation strategy on when you want to do it. They agreed and then Minister (Michael) Halkitis came back and said they can’t give an increase now and would have to wait until the price came down and we told him the price will come down in the summer and it did. But now the price is going back up and retailers are at the point where we can’t contain this anymore.”

The BPRA had threatened to lay off staff in previous iterations as well as begin to reduce operating hours on some of their stations, but these threats, once seemed idle, may now have a possibility of happening because at the time when they last promised to cut staff and reduce hours, the price of oil started to decline immediately afterwards, easing pressure on retailers.

However, now that OPEC has cut production and there is no end in sight for how high the price of gasoline would end up in the next three months, the pressure is on to get back to the negotiating table with the government on a permanent solution.

Mr Jones added: “We don’t want to work on a threatening mode with the government. We believe the Prime Minister was sincere when he said they are looking at the matter and that they understand what we are up against and announced that they had given us some relief and that was given as a result of them understanding where we gave them lots of details showing where the cost is more than half of the margin.”

He added: “Despite the economy, the volume of people are not driving more because it's on an island, they go from home to work, they go out to go back. That's not a business where people are doing more. It’s just cost-prohibitive.”