Gas prices are on their way back up in Cayman, but the planning minister said recently in the Legislative Assembly that price regulations will be coming soon with the creation of the Public Utilities Commission.
Minister of Planning Kurt Tibbetts, whose ministry oversees the petroleum industry, said a proposal is coming to develop rules so that bulk gas distributors will have to report prices to government. That’s the first step in regulating consumer gas prices, Mr. Tibbetts said.
“When we went at this the first time years ago, the biz of price control was something we were very afraid of,” he said. But now, the minister said, the government has been studying the price-setting scheme in the Bahamas, and gas distributors could end up with a regulated market similar to how the Caribbean Utility Company has to set electricity rates.
The Bahamas uses a system in which its government sets a level that bulk distributors can mark up and a second level for gas stations, dictating how much money they can make on a gallon of gas.
Mr. Tibbetts said government could not rely on gas distributors to self-report prices. He said distributors gave import records to customs from their local offices without actually proving how much they paid for the fuel in the first place. If government took the distributors’ word on the prices, Mr. Tibbetts said, “They’d be laughing behind our backs” while manipulating prices on import forms.
The new Public Utilities Commission, under the minister’s proposal, will take responsibility for setting rates on fuel imports and markups by retailers. He said the new regulator will be up and running before the next legislative session in September.
When gas prices spiked to more than $5.50 late last year, the minister said, he spoke with fuel importers and retailers, asking for their suggestions on how to control gas prices. They refused to turn over pricing data, calling the costs confidential business information. “Since they have not come back to us with any suggestions, we are now acting,” Mr. Tibbetts said.
Gas prices bottomed out in the spring at just under $4 a gallon, but have since started going up again to around $4.40 to $4.50 a gallon for regular, unleaded gas.
“The price of fuel has the ability to almost single-handedly decide what your inflation rate is for the year,” Mr. Tibbetts said. The Cayman economy is linked so closely to the price of fuel, he said, the cost “affects the price of every single thing.”
Government inflation data shows fuel and related goods are regularly the largest category of imports to Cayman, accounting for a full 20 percent of imports by dollar amount for the past two years.
“When there are certain commodities, especially fuel,” Mr. Tibbetts said, “you can’t simply leave [the price] to chance.”