Leslie Miller's Oil Nationalization Plan

First Published: 2004-07-10

The Nassau Tribune of July 6th described the recent fall in gasoline prices under the headline "At pump, gas prices fall"; and it featured the "oil nationalization plan" of Mr. Leslie Miller, Minister of Trade and Industry. He noted the large swings in the world price of crude oil and claimed that this was "strong anecdotal evidence" supporting his proposed National Energy Corporation (NEC)."

Mr. Miller claims that a NEC would both stabilize and lower the retail price of gas. It would buy gasoline directly from oil refineries around the world and sell it to the oil companies in the Bahamas for resale to the Bahamian consumer. Thus…NEC would eliminate the "middleman's" margin and pass it on to the Bahamian consumer.

This is a reckless proposal.

Let's look at the facts.

The price of gasoline is now controlled by the Government as is every aspect of the wholesale and retailing process including the number of oil companies in the market, the location and number of gasoline stations, the contracts between wholesalers and retailers and even the compensation of gasoline attendants. Mr. Miller apparently thinks that this level of government control is inadequate; and his solution is the de facto nationalization of the petroleum brokerage business.

Would a Bahamian Government corporation succeed in this specialized business and achieve what Mr. Miller expects? Not likely.

In fact, there is no evidence to suggest that the Bahamian Government has the capacity to be competitive in this part of the petroleum industry. One needs only to look at the Government's record of mismanagement. For starters look at Bahamasair, Nassau International Airport, BATELCO, BEC and the Post Office. Furthermore, the record of other governments in the petroleum business is abysmal.

– No…the answer is not more government control but less. Let a freer market work.

– Yes…in volatile times prices will fluctuate; but a free market is a better way to deal with market forces.

– Instead…the Government should encourage more market competition, allow new entrants, and permit the petroleum companies to optimize their operations. It should get out of the regulatory business and reduce the bureaucracy…not increase it.

Mr. Miller is repeatedly touting his oil nationalization plan at a time when other members of the PLP team are in "a full-court press" trying to secure critical foreign investment. In a time of economic troubles this sounds like irresponsible behaviour…something the PLP should be able to eliminate.

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