DECISIONS TODAY EMPOWER BELIZE TOMORROW
2008: the price of a gallon of regular gas was $8.20BZ while a barrel of oil was at $294BZ.
2016: the price of a gallon of regular gas is $8.23BZ while a barrel of oil is at $74.36BZ.
This translates to the Government of Belize raising gas prices on you by 295%. Let that sink for a while!
In the document “TOWARD A NATIONAL ENERGY POLICY ASSESSMENT OF THE ENERGY SECTOR IN BELIZE” published in March 2011, states that our primary energy sources are: 66% fossil fuel, 26% biomass, 3% hydro, 5% electricity imported and 0.03% solar and wind.
These percentages have not changed significantly over the last 10 years, which is a testament that we are nowhere near weaning ourselves from importing fossil fuels as our primary energy sources.
It is important to note that gasoline is consumed mainly in the transportation sector, and even though Belize has a local petroleum production, we still import 100% of the petroleum products we consume. This high dependence threatens energy security and economical stability given oil depletion and the high volatility of oil prices in the international market. Tax benefits for ultra efficient car imports are not contemplated and just this week it was announced that tariffs went up for certain imported automobiles. Transportation and the cost of transportation is crucial to the development of the country’s production and export sector.
The government regulates the retail prices of the service stations. These prices include a high proportion of taxes, used in part to buffer against the international fluctuations in the petroleum market.
To take advantage of the current cheap energy and to spark real economic growth in Belize, the Government of Belize must consider price adjustments so that the gas at the pump sells for about $5BZ per gallon.
Real development of Belize must be a 100 year plan broken down to 50 years, 25 years and 5 year increments.
The short-term positive net effect of such an initiative of taking advantage of cheap fuel (energy) by reducing price of fuel to around $5BZ per gallon would do several things to boost the economy and set it up for a long term recovery and growth. This list is by no means exhaustive:
It will increase the disposable income of all Belizeans, which in turn they will go out and spend that money on non-essentials, which will stimulate the economy.
It would reduce cost-of-living, especially for essentials such as food, since transportation costs would go down by half.
It would reduce the cost of moving people around the country, since most people travel by bus to get to work and for general commute, again, this can translate into more disposable income for Belizeans, which translates to further economic activity since the more disposable income Belizeans have, the more they will spend in the economy.
The tourism industry would boom, especially among Belizean hotel owners, tour guides and operators, who would be able to see an increase in profits without having to increase their markup on tours and accommodations. We would be able to be more competitive in the region, especially during the acute slow season, since we would be able to afford to reduce prices and still keep a comfortable profit margin.
Entrepreneurs will find it easier to take risks to start businesses geared towards creating value-added products, since energy to move around raw materials and finished goods will be cheaper.
We have a very great opportunity to use the low interest rate and influx of cash from the Petrocaribe initiative to invest, heavily, in alternative energy and hedge ourselves from the inevitable increase in fossil fuel acquisition costs in the future, and move towards an energy independent nation.
Lowering fuel costs will immediately stimulate the economy. The government needs to think long term, the perceived loss in revenues should be overridden by the fact that transportation and the cost of transportation is crucial to the development of the country’s production and export sector, and we can afford lower energy costs, via fossil fuel, now. We may not in the future.
With the right economic policies, in the not too distant future Belize would be able to build:
ALL without having to borrow ourselves into oblivion and rob our children’s future from them.