BY YVES EPHRAIM
It has been my observation that governments tend to deceive the public by applying alternative meanings to words that the general public would ordinarily construe differently.
For example, when you hear that someone was given a life sentence for a crime, unless you are a part of the justice system, you will likely think that the person will be in jail until they die.
Not so my friend!
If you thought that a life sentence was actually “for life”, you would be completely wrong.
A life sentence is 25 years.
Go figure!
In a similar way, the word subsidize has been hijacked for the government’s self-serving purpose.
Typically, when you say you will subsidize a person or a business, you normally think that you would be taking YOUR OWN MONEY and giving it over to that business or person to assist.
Not so with government!
The use of the word, subsidy, particularly in the case of the cost of fuel means something totally different.
The word, in its corrupted context means: “not collecting the amount of taxes that government EXPECTED to receive”.
In fact, a true definition I gleaned from an online dictionary state that a subsidy is: “Financial assistance given by one person or government to another”. It is about GIVING not receiving!
In the context of fuel prices, the government has not used a SINGLE dollar from the treasury to pay or give anyone for the importation of any fuel.
This is the first myth I must bust.
By using the word “subsidize” the general public is deliberately fooled into thinking that the government actually paid out money for the fuel when no such thing happened. The numbers below speak for themselves.
If the government wanted to be totally transparent, it would have rightly declared that it had to settle for less consumption tax than it would normally receive in order to keep down the price of fuel at the pump.
This subsidy narrative is meant to give the public the impression that a loving and caring government is looking out for your interests. There is very little truth to that as you witness how that the same government is attempting to crush indigenous business owners for simply asking for some relief.
Government provides no value in the process of buying, selling, processing or delivering fuel in this country, yet they walk away with at least 17% of the income (second highest) while the dealers who bear the cost and risk to actually facilitate the delivery of fuel to the consumer, only get 6.5%. Do you think that is a fair share? With the recent increase to $17.99, the dealer’s income has reduced to 6.0% compared to the cost of gas.
Let me share data that was released by WIOC in September showing the cost-breakdown of the $16.50 per gallon.
For the purpose of simplicity, I have modified the breakdown of the $16.50 per gallon from an income allocation standpoint amongst the local stakeholders, as follows:
1. WIOC Collects – $12.0923
2. GOVERNMENT Collects: $3.2277
3. TRUCKERS Collect – $0.10
4. DEALERS Collect – $1.08
Let us analyze the numbers.
The first lie we must expose is the narrative that government is “still” subsiding the cost of fuel.
The $3.2277 per gallon collected by government above does not support that narrative.
How is collecting $3.2277 on every gallon of gas equal to a subsidy?
When the leadership of this government says that they are subsidizing fuel what that leadership is actually saying is that they are not getting as much as they used to collect.
I am told that during the last major wholesale fuel decline, when this government kept retail fuel prices high, they earned as much as $8 per gallon in consumption taxes alone.
In other words, if the government was accustomed to earning $8.00 per gallon but now only earn $3.00, for example, they would deceptively say that they are subsidizing the fuel by $5.00 per gallon.
Several things that the public should know:
1. The government collects its money upfront at the point of importation;
2. The gas station dealers MUST pay for their gas upfront at the rate of $15.42 per gallon as in this example. Anybody who has run a business for any time can see the challenge this presents with cashflow with a meagre $1.08 margin. The gas station owners are not given any credit so they must first buy the gas at $15.42 per gallon. Their purchase cost would have skyrocketed by 24% for the most recent increase.
From a cashflow perspective, the gas station dealers are essentially funding WIOC’s working capital and the GOVERNMENT’s coffers. For a government that says that it wants to minimize the importation of fossil fuels, it seems to be very dependent on these fossil fuel imports.
I wonder how they are going to earn money from the importation of sunshine.
I find it very unfortunate that the leadership of this country is not willing to engage the gas station dealers but prefers to call them an oligopoly, threatening to expand the WIOC stations network to side step them in order to make them irrelevant.
Let us examine the meaning of oligopoly.
It means: “An economic condition in which a small number of sellers exert control over the market of a commodity”.
First of all, this so-called oligopoly was created by government’s WIOC monopoly.
These sellers (dealers) cannot even control the price. This is a total misapplication of the term in my opinion, in this context.
If the PM is really willing to get away from his imagined dealer stranglehold on the market, then he should allow another oil company like RUBIS to import its own oil and not force RUBIS to buy from WIOC.
Perhaps they can get a better price on the international market that could redound to the benefit of Antiguans and Barbudans.
The rash and ill-considered threat to side step the striking dealers by forcing WIOC to build new service stations makes no sense.
Why? Because it breaks the business model for WIOC, who will find themselves plunged into higher operating cost and capital expenditure. WIOC will have to buy or lease real estate, construct new stations, hire and manage new staff in order to setup new stations.
If WIOC makes such a move, it will destroy their profitability and I would personally recommend that shareholders dump their shares in WIOC. In fact, the PM has no authority to demand WIOC to build new stations. That is the purview in the WIOC Board. Again, this sounds like interference in the affairs of a publicly traded company. I wonder what the ECSE would think of this attempt to direct the operations of the WIOC company.
I learned somewhere that this would violate good corporate governance.
No shareholder wants to know that rash government decisions could erode their return on investment.
I say with no apology that if WIOC follows the suggestion of building and owning more service stations, it would be a DUMB idea.
Moreover, WIOC cannot build a single service station in a week. Therefore, this threat is totally toothless!
I am appalled that a simple matter like this has been allowed to escalate.
The leadership of this government prefers to stay in ivory towers and dictate rather than go and meet with the dealers. Unfortunately, the leadership prefers to do name-calling and not constructive dialogue.
I wish that the leadership would have used that same energy to tell the USA that we are not accepting deportees. I guess one can only bully those who one believes has no leverage.
As I am made to understand, the dealers were simply asking for a twenty-five cents increase. In contrast the Government was very sympathetic to APUA raising it rates by more than thirty cents but it did not think that the struggling dealers were worth the respect of a counter offer or a response to their letters.
I cannot help but notice the pattern, where this government has again demonstrated its tendency to be antagonistic towards indigenous business owners. Here this administration shows its hatred for local businesses. The disrespect for the dealers is very palpable.
I fully support the dealers strike and you should too
This article was originally published by Antigua News Room. Read the original article here: OPINION: Deceit By Obfuscation.