Blame the Government – Gas prices soar, government cuts back on taxes

May 23, 2008 Peeping Tom

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The price of oil keeps rising and poor non-oil-producing governments are finding it harder to maintain daily life because so many things depend on oil. If people should only stop and consider, they would see that their whole life seems to depend on oil and the higher the price gets the more expensive it is for them to do things that they once took for granted.

Farmers are being asked to pay more to transport their crop to market, and the large farmers are waking up to the fact that reaping and planting their crops are so much more expensive. People are also having to pay more simply to move about. Just last week Guyanese were faced with gas prices that would have reached $1,000 a gallon.

For one, the farmers have to pay more to cultivate and reap, the buyer is going to have to pay more for the produce and this is not going to change in a hurry because the rising oil prices do not seem to heading lower any time soon.

In most countries these prices may go where they will and except at the international level, the governments do precious little. They cannot because it is not in their plan to subsidise costs to their people. But this is not the case in Guyana because the government must always strive to ensure that its people do not encounter unnecessary hardships.

Today the price of gasoline would have passed the $1,000 per gallon mark and would have seen people paying much more for public transport. This is something that no one wants to contemplate because the people are already pressed to pay more for just about everything

The government understands that the people who provide public transport are already paying more for vehicle spares, tyres, and just about everything that goes with a motor vehicle. These operators must also pay more for food just like the rest of the society and they are the ones tempted more than ever to hike prices simply to maintain their level of living.

But the government was able to work out an agreement with minibus operators that there would be no price increase until gas prices reach and pass the $1,000 per gallon mark. A year ago such a price was not even contemplated. In fact it would have been laughable because the idea seemed so far fetched. This may have been far fetched then but it is a reality now and in the coming weeks the people of Guyana could see this happen.

Those who blame the government for everything have failed to recognize that there was a major government intervention just this week to keep the price of gasoline from reaching the $1,000 per gallon mark. These critics must understand that a government gets money from taxes and from exports. Earlier this week the government decided to forego earnings in the interest of the people and slashed the excise tax on gasoline. Before this intervention, one gallon of gasoline cost some $990 at the pumps.

It must be noted that not so long ago government collected revenue by way of a fifty percent excise tax. That money went towards helping to maintain and even create social services. The government has decided to forego collecting even more of this money by cutting back on the excise tax. From 50 per cent, the tax is now a mere seven percent.

Just on Thursday, oil soared to US$135 a barrel, up from US$33 a barrel last year January. At the start of the year analysts were debating whether oil prices would reach what they called the magical US$100 a barrel. The prices did reach that level and have surpassed the figure to the extent that these very analysts are looking at US$150 a barrel before the end of the year.

This is frightening because Guyana is not an oil producer and when the government unveiled its budget at the start of the year it budget for an oil price of US$112 a barrel till the end of the year. Immediately one can see that the government would have to spend so much more on oil to fuel the energy sector.

And while the blaming continues no one has stopped to think that electricity costs remain constant, largely because the government is struggling to protect the people who are paying more for just about everything, not least of all, food.

In the United States, people are contemplating using mules to do their harvesting; some are taking out the bicycles and still others are traveling less. Guyana should adopt similar measures but the government is stopping short of advising the people along these lines because the critics are just waiting for something to blame the government about. They are waiting to say that the government has made people poorer. They are waiting to blame the government.

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