Bahamian consumers can expect a trickle down effect of rising fuel costs being triggered by a number of geo-political events, including rising tensions between Israel and Islamic militants in Lebanon, according to a local energy analyst.
“The conflict in the Middle East will increase fuel prices because several of the entities involved, namely Iran, are major producers of crude oil,” explained Gilles Deal, who works in the Ministry of Energy and Environment.
“We are likely to see prices continue to increase due to recent events in the Middle East with Israel and Lebanon.”
Mr. Deal further explained that the impact of the rising fuel prices will not be immediate.
“Within a month’s time it should trickle down,” he said. “Companies have to buy several shipments before new prices reach them.”
His comments came as the Associated Press reported that oil prices rose in Asian trade on Tuesday as Israel launched more heavy air raids on Lebanon in its continuing offensive against the militant Hezbollah group.
The AP quoted Mike Guido, Societe Generale’s director of commodity strategy, who said “geopolitics rules the day” and that even a cease-fire between Israel and Islamic militants would not allow oil prices to fall below $70 a barrel because oil markets remain highly concerned about violence in Nigeria and Iran’s nuclear standoff with the West.
Following widespread military action in Lebadon last week, oil prices began a steady climb.
Another AP story on Tuesday quoted Tony Nunan of Mitsubishi Corp’s international petroleum business in Tokyo saying, “If it spreads to the other countries, it will be disaster for oil prices.”
Even before fighting escalated in the Middle East between Israel and Hezbollah, there were local worries concerning rising fuel costs.
In fact, Bahamians are facing ongoing financial burdens as rising energy costs continue to drive the cost of living up, according to an economic report released by the Central Bank earlier this month.
That report, “Monthly Economic and Financial Developments May 2006”, says that due to higher energy costs, average consumer prices in The Bahamas rose by 2 percent in the 12-month period ending April 2006.
“The rising cost of oil and other commodities remains a cause for concern,” said the report.
But the International Monetary Fund (IMF) said in a report on The Bahamas following its recent staff visit here that even in the face of high oil prices, the economy grew by two and three quarters of a percent from an average of one and three quarters in 2002 – 2004.
It is expected to grow by four percent in 2006. This, according to the IMF, was led by the tourism sector, as well as by hotel and residential construction.
By: Candia Dames, The Bahama Journal
