EDITORIAL – Fuel price regulation: Good politics, bad policy

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bimjim
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EDITORIAL – Fuel price regulation: Good politics, bad policy

Unread post by bimjim » Wed Mar 22, 2017

https://www.caymancompass.com/2017/03/2 ... ad-policy/

EDITORIAL – Fuel price regulation: It may be good politics, but it’s bad policy
March 21, 2017

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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