"The price per barrel of oil has increased almost 60 percent during 2007 and it has significantly affected us in regards to our electricity bills and transportation costs, including air transportation," Minister of State for Public Utilities Phenton Neymour said.
"It has also affected the profitability of some of our utility corporations in The Bahamas, and so the trickledown effect is really significant and it is recognized by the government. We have a strategic approach to address it. However, we must be cognizant of the fact that the change in the way we function and operate and our reliance on fossil fuels cannot be changed overnight and it is going to require considerable effort from the government and the Bahamian people.
"We’re going to have to address the way we live."
Internationally, some analysts predicted that the high oil prices would result in record gasoline prices, and consumers could expect to pay more for various goods and services.
Locally, Chamber of Commerce President Dionisio D’Aguilar said Wednesday that the situation has enormous implications for businesses and consumers.
"First of all, the cost of everything that we import will naturally increase because of increased shipping costs. There are also a number of businesses that are very energy dependent, such as laundromats or hotels that will suffer ever-increasing costs as a result of ever increasing energy prices," Mr. D’Aguilar told The Bahama Journal.
"Also, consumers at the pumps and those businesses that are involved or use transportation as a major component of their business will suffer major increases in those costs. I’m sure there will be a number of businesses that will not increase their prices initially hoping that the price of a barrel of oil will come down in the short term. Maybe this increase is just a short-term fluctuation that will come back down."
Businesspeople have long complained about the burden high energy costs are placing on them, and as a result many of them have passed the costs on to consumers in order to stay in business.
As an example, Mr. D’Aguilar said his company, Super Wash, effective January 1, raised the cost of a token by seven percent from $1.50.
"Now the price of energy has gone up again. We’re always hoping that it will come back down," he said.
"As a country, as a government we are all going to have to look at oil and reduce our dependence on it and so we now have to seriously look at alternative energy sources such as solar, ethanol and other such substitutes."
Mr. D’Aguilar believes that the government can play its part by encouraging consumers to use solar energy.
"We can’t maintain the status quo because the amount of money the country is spending on oil imports is increasing at an alarming rate. Over the last 10 years it has more than doubled. I think currently we spend close to three quarters of a billion dollars on oil imports [annually]."
Minister Neymour, meanwhile, said the government is serious about addressing the growing problem.
"I’ve announced previously that we are putting together a National Energy Policy and as you can see internationally, other countries are addressing it in the same manner," he said.
As an example, Minister Neymour said, the government may encourage the use of florescent lights as an energy saving measure, and the Bahamas Electricity Corporation would be encouraged to engage in a public education exercise promoting conservation.
BEC has been hit hard by rising costs, the minister said.
"For instance, BEC’s fuel bill – if I remember correctly – increased over the last year by some $20 million," he said. "If that had not occurred BEC would have been a profitable organization last year. However, BEC is not profitable and that is a contributing factor."
According to Minister Neymour, BEC’s fuel bill last year was approximately $230 million.
"We expect that to increase even more this year. BEC’s bill also exceeded its budgeted bill, which also affected BEC’s operations and it’s cash flow."
Minister Neymour was also asked whether BEC may have to make some adjustments to its rates, but he said this would be a matter for the government to make a decision on.
"We have just completed a tariff review, which will cause some adjustments at BEC," he said. "I cannot say at this time until the government makes a determination what’s the best direction to go with."
According to Minister Neymour, the Water and Sewerage Corporation has also taken a "big hit" as a result of rising oil prices.
"It pays a fuel bill at its reverse osmosis plants. The pumps are diesel driven and so their operating costs have also skyrocketed over the last year," he said.
When he spoke to the Journal Wednesday, Mr. D’Aguilar predicted that jitney and taxi fares may also have to go up.
"People are going to spend more money on electricity and so it is going to have a dampening effect on business unless wages keep up," he added.
