Oil prices are falling but nothing else

Sep 14, 2008 Features / Columnists, My Column

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During the latter part of this year and continuing this year, many airlines crumbled because of the rising oil prices. Economists and speculators began to eye an oil price of US$200 per barrel.

The fear was great because many countries would not have survived had the oil price continued its inexorable rise.

There were protests in some countries. In Guyana, the government tacked on an additional small piece to the salaries of public servants to compensate.

And for the records, this small piece should remain in place because it has now become a part of people’s earnings.

Guyana witnessed the decline of some airline operations to that country and the only excuse the companies could offer was that the price of oil had made their operations unprofitable and impractical.

The sad part was that they left many overseas-based Guyanese stranded in the land of their birth while these Guyanese had their jobs in other countries.

The drivers and operators of public transport began to pay more and more as the price of gasoline and diesel fuel kept rising.

Soon the price of gasoline passed the $1,000 mark although the government kept slashing the consumption tax in an effort to keep the prices affordable.

And while this was happening the nation watched the price climb toward the US$150 per barrel mark. Minibus operators began to complain and to protest.

Some displayed sympathy for the commuter who was not getting the kind of pay increase proportional to what these minibus and taxi operators were seeking but they all complained that they had to live in the same society. And that I could understand, because in these times the greatest person to support is oneself.

But within the past few weeks something strange has been happening. The price of oil has been dropping so fast that it is almost back to what it was nearly a year ago. It is now at about US$100 per barrel.

However, the price of gasoline and diesel remains high and with this continued high price the cost of travel remains high too.

It is not that the oil companies have not been importing this cheaper fuel but to me it seems as if the increasing profit margin is too good to give up.

There is another side to all this; the airlines seem to be charging even more and those that folded must be kicking themselves for not staying the course just that little while longer.

For one thing, the power company is holding prices down and to its credit it seems as if the consumer is being borne in mind although there is still the case of the minority still paying for the majority who steal power.

The strange thing about all this is that one would have expected the ordinary people to do something in the face of the fuel price rise. I would have expected to see less driving and where necessary, even more walking.

Instead, there continues to be the importation of vehicles that are nothing more than fuel guzzlers and the taxi services keep doing brisk business.

There are the large SUVs that are best suited for rough terrain but which predominate in the streets of the city and its environs.

In the United States where the pay, dollar for dollar, is much higher than it is in Guyana, people simply parked their cars. Those who had fuel guzzlers traded them in.

The Department of Transportation posted its figures last week and they showed that there has been an increase in the use of public transport by between some 10 per cent people and 16 per cent.

I know people who drive to the train station and to the bus stops and park their vehicles to travel to the city.

One woman, who had one of those old Chryslers that perhaps gave no more than 18 miles to the gallon, actually gave away the car to a friend who came from Guyana.

The Guyanese ever so keen to be able to move around expeditiously, jumped at the offer. A few days ago, the woman whom I knew was asking me for a raise to buy gasoline.

Yet, that is beside the point. The focus is on the cost of airline tickets. I was surprised that despite the fact that an airline ticket now costs as much as three times what it cost last year, the airlines were all booked to capacity during the just concluded peak season. Flights could not be had going or coming for nearly two months.

I thought that this had to do with Carifesta in Guyana but then an airline official told me that this is always the case during peak season.

My conclusion is that Guyanese are rich, some beyond their wildest dreams.
I suppose what is worth having is worth paying for and a vacation for many is worth having, so it is worth paying for, and there are many people who are prepared to pay.

Oil prices are now 25 per cent less than they were a few months ago. There will be a drop in air fares at this time because the peak season is over. Supply and demand is no longer a factor.

But come Christmas these fares will go up again and I wonder whether the drop in oil prices will mean anything.

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