Oil Webs

First Published: 2005-07-15

When CSME was the big issue in May, The Tribune introduced an editorial with Mary Howitts’ poem “Will you walk into my parlour said the spider to the fly? T’is the prettiest little parlour you ever did espy”.

Well, that fly got away, at least for the time being.

Simultaneously two good buddies Hugo and Fidel were weaving a different web. To catch a few flies, they cobbled together a deal to entice small Caribbean countries into their net and named it PetroCaribe. The sign out front read “Oil for Bananas” – (or something exchangeable) and “Prices you can’t resist”.

The objective? One hundred percent – 100% of the Caribbean market.

Some analysts have questioned the lengths to which Hugo Chavez will go to establish Venezuela as a “political leader in the region”. If that seems outrageous, never underestimate a communist. They like a lot of power, and in these times of high oil prices, oil is the means to power.

The rout of Fred & Co and defeat of the CSME agenda succeeded because Bahamians value independence and national sovereignty, and they made that very clear. But behind their backs Leslie Miller was busy arranging to sign an Agreement with a dictatorial ruler who does not respect the property rights of his own subjects. Should Bahamians be concerned about property rights too? That question is now open for discussion.

If the deal with Chavez succeeds in forcing the withdrawal of the current suppliers due either to government coercion or undercutting prices, and the country is left dependent on a single supplier there is no guarantee that the good times of the initial lower prices will last. In fact they won’t last, count on it.

The government of the Bahamas has for some time been much involved in the market for fuel. Price Controls, limiting the number of suppliers, taxation and other regulations have been factors in the price at the pumps. Government through the newly created National Energy Council has expanded its role and the outcome based on past history of government management in other areas of the economy is predictable.

A brutal fact of life is the record of Government mismanagement that demands a free market solution to the problem of high fuel prices rather than a government monopoly solution that diminishes market forces even further.

Leslie Miller was lured into the PetroCaribe Agreement with the promise of lower prices. He succumbed to the proverbial “free lunch” principle. The Chavez agenda for “regional energy integration” ought to be a wake-up call for the defenders of economic freedom in the Bahamas. What else could be “integrated” into the Chavez agenda for the Caribbean?

Time will tell who becomes the lunch and who gets to eat it.

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