The Progressives’ proposal to lower the price of gasoline may look good on a bumper sticker, or sound good on the campaign trail, but as a piece of legislation, it’s bad policy and bad precedent.

We understand the feeling of dismay our fellow motorists undergo while watching the digits on the fuel pump whirl faster than symbols on a slot machine, but that’s nothing compared to the concern and dismay all Cayman Islands residents should experience when listening to Planning Minister Kurt Tibbetts talk about his Fuel Market Regulations Bill.

As we reported in Tuesday’s Compass: “The utility regulatory office will be given ‘significant market power’ under the provisions of the bill to determine whether competition among distributors and retailers ‘truly exists in the fuel market.’ If the market is not determined to be competitive, the regulator is authorized to ensure there is ‘suitable competition,’ Mr. Tibbetts said.

“‘If these measures fail, then the next step, in consultation with Cabinet, will be outright market price regulation,’ the minister said. ‘These various steps … must be taken before taking the nuclear option. That option will be used when it is determined … that collusion is taking place.’”

In brief, the legislation would appoint a group of government bureaucrats as the official arbiters of competition and enable them, in collusion with a cadre of elected politicians (whose hold on power depends on their popularity among the citizenry) to dictate to private businesses what they are allowed to charge for their product.

We understand the May elections are looming, but lawmakers ought to think very carefully before threatening multinational companies such as Rubis and Sol who can quite easily resort to a “nuclear option” of their own – instructing their fuel tankers to bypass Cayman altogether. (We like equestrian sports and spaghetti Westerns as much as anyone … but riding a horse or donkey to work isn’t very appealing.)

In regard to the government’s bullying of our local fuel retailers – i.e., Cayman’s gas stations – the bill should be interpreted as a warning to every other business in this country that if lawmakers someday deem the prices of anything are too high, they have assumed the imprimatur of intervention in those areas as well … and, of all the absurdities, in the name of “competition.”

What if future politicians decide they can score votes by promising to lower the price of milk? Mangoes? Athletic shoes? Janitorial services? Accounting? Or, gasp, newspapers? (The 50 cents this particular newspaper costs, by the way, is the best money you’ll spend all day.)

Assuming lawmakers really do want to lower the cost of living for their constituents, the far more efficient, effective and principled way would be to lower the cost of government. Think: What do you think would have the biggest impact on your bottom line – the government setting up an apparatus to try to “control” the price of gasoline; the government revising downward the standard 22 percent import duty on goods; or the government eliminating the 75 cents per gallon duty it levies on gasoline?

Some countries aggressively regulate fuel prices or even subsidize prices at the pump. Most are oil-producing states, such as Iran, Nigeria, Trinidad and Tobago, and Venezuela. Setting aside the fact the only oil Cayman produces comes from coconuts and neem trees, are those the countries whose lead Cayman should be following?

To paraphrase Voltaire biographer Evelyn Beatrice Hall: We may not agree with the prices the gas stations are offering. But we will defend to the death their right to set them.

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5 COMMENTS

  1. The one think I cannot vision is why this was not done before now. I do not know why the Progressive government have this style of throwing every thing in one basket a few weeks prior to election. They have not learned that by now the crowd is watching. Simple little projects and good deeds should be taken care of the very first one hundred days, because they do have lots of money at that time.

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  2. Your editorial is a bit uninformed as to how proper regulation works. In most advanced economies, where there is limited competition, regulation is the only way to insure that market leverage is not used against consumers. In the EU, Canada and the US regulation is done in markets such as health care, utilities, alcohol, telecommunications, fuel storage & transport, etc. It can properly be done in Cayman as well.

    We need to get away from fear based comments such as “….Rubis and Sol who can quite easily resort to a “nuclear option” of their own – instructing their fuel tankers to bypass Cayman altogether.” This is ridiculous to think they would do this. Maybe Flow should turn off the undersea cable or Carnival should bypass Cayman for better terms. Clearly the writer does not understand business. If Rubis and Sol don’t like Cayman, they would sell their business to another party who would know the situation.

    Bottom line is that fuel prices are way too high for the proximity to inexpensive fuel in the USA. If the prices are truly reflective of cost, then they will withstand the light of a open regulated market. If there is something to hide then it should be fixed. Our market is too small for there to be a free market. Unfortunately I do not have complete confidence that this govt has the skill sets to manage a sophisticate regulatory scheme. But I am willing to let them try!

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  3. Twyla , this Government are not doing or putting anything in the basket, they are just trying to fool you and everyone else , trying to get your vote .

    The Editorial explains everything about what they have and can do to help the people . I think that doing Legislation like this fuel regulation Bill , was just done to say that we did something .

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  4. While the timing of this measure could be seen as “electioneering”, the merits of its intent can be supported (from a consumer perspective) or questioned (from a “price control” perspective, as The Compass and has done).

    I’ll be happy to take lower fuel prices if the results of this Bill impact fuel providers so as to foster their consideration for same. Having not seen the Bill or its associated Regulations I cannot present an informed comment. However, knowing how we have historically experienced legislation being passed and the associated Regulations to enable enforcement falling years behind, I remain skeptical. Also, knowing how legislation often fails to meet the intended goals (as proven by a recent story of erroneous legislation “slipping past” legislators), I would hope that this Bill or its associated Regulations takes into account the practice by some gas station operators to calibrate their pumps in US gallons instead of Imperial gallons, thus cheating the public while presenting the perception of lowering fuel prices. I can say this with impunity as I personally experienced this and was refunded by the fuel merchant when I challenged.

    However, drawing from past incidents of incomplete (or erroneous) legislation and adding the “rush factor” of Government’s numerous pre-election actions I would not be surprised if major protective components of this legislation will yet have to be added in future sessions of the LA. As is common, very little is done correctly in the public service arena the very first time.

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