The new July 1 retail fuel prices are not adding up. Having read about them here and here, and having looked back at my own historical fuel price data, as well as the text of PM Mottley’s mini-budget speech, I will argue that something is not adding up, and here it is:
The last fuel price change was on mid-night June 10 (June 11). Gasoline moved from $3.40 to $3.60. Diesel moved from $2.61 to $2.80 (Column A). If you re-read the details of the PM’s mini-budget (see here and here), you will note the announcement of a Fuel Tax levied at 40 cents on gasoline and diesel (Column B). If NSRL was not removed, then prices would be what you see in Column C ($4.00 and $3.20).
However, the PM’s announcement also indicated the removal of NSRL, so the net increase should have been only $0.28 on gasoline and diesel (Column D). Thus, the expected price should be $3.88 and $3.08 (Column E). However, this is not the case as the prices being announced are $3.96 and $3.21 for gasoline and diesel respectively (Column F).
This brings us to Column G, the unaccounted for / unexplained $0.08 and $0.13 increase in gasoline and diesel respectively. I have one possible explanation. Had the status quo remained (no Fuel Tax, Road Tax remains), we would have seen a price increase anyway. Recall that Government adjusts prices during the first week or two of every month. So what we are seeing is basically two price changes (both increases). The addition of the Fuel Tax by the Government, as well as the monthly price change which, as the Government usually explains as: “These price adjustments are in keeping with Government’s policy of allowing retail prices to be reflective of those on the international market.”