ARE THE PRICES OF FOOD AND COMMODITIES IN ST. LUCIA IMMUNE TO THE "OIL & GAS REVOLUTION"?

THE CHOISEUL POWERHOUSE has (among other things) been monitoring the price of food and other commodities on our supermarket shelves since the dramatic decreases in oil and gas prices on the world market started.

Our findings indicate that the slumping oil prices (now at US$30 a barrel) have had absolutely no impact on the prices at our local supermarket. Did the "economic law" apply when oil prices were trending up? No! We were made to pay through our nose then. The prices of the unregulated imported items unconscionably went over the roof when the price of oil was on the up. 

The question is: How does one explain this anomalous phenomenon?

A small supermarket  operator from Choiseul explained it in terms of "stock" and "time"! Indeed, his explanation needs validation. How fast is the turnover of stock?

Why do we make so much noise about VAT and price of oil at the pumps but remain silent on the irrational behaviour of our pricing structure for goods at the supermarkets and elsewhere? Why are our prices not sensitive to "supply and demand"? Are we not a free market economy? Am I left to conclude that we don’t give a damn about our country?

On top of all we have said here, the POWERHOUSE has one major fear: that based on the current trend, we are of the view (and we hope we are wrong) that prices at the supermarkets may remain "fixed" and "unchanged" as long as oil prices continue to drop. For example, a packet of salt fish will continue to remain at EC$14.10 as long as oil prices continue to obey the laws of gravity.

However, what are likely to happen should the price oil and gas start trending upward and say it peaks at US$100 a barrel in quick time? What will happen to supermarket prices? Will the laws of gravity continue to apply or will they disappear? Based on past trends, the answer is predictable and obvious: The  current unchanged prices will likely become “base prices” for calculating a new price structure.

What mechanisms do we have to ensure fairness prevails? 

While a free market economy is designed to generate profit for investors, shouldn't it also have built-in safeguards to protect consumer interests? If it does not, then we may well be encouraging a form of daylight robbery of the type which seemingly (and in my view) characterises the status quo - even in the midst of an "Oil and Gas" revolution which has resulted in the lowest gas prices in 12 years.

President Obama deserves a standing ovation for his energy and diplomatic policies which are major factors contributing to the “revolution” of the oil market. His successful initiatives re: the exploration of shale oil and his lifting of sanctions against Iran have (and will) in a large measure contributed to the status quo.

It is now up to Kenny to ensure that a “watchdog system” is designed to help consumers benefit from the "Oil & Gas revolution" - not just at the pumps but also at the supermarket chain and elsewhere. In the same way that his admininstration brought about the Telecom revolution which resulted in the liberalisation of the Telecom market in St. Lucia (although lately there seems to subtle and underhand attempts by C&W and FLOW to reverse some of the gains), he should ensure that supermarket chain becomes responsive to the the "Oil and Gas" revolution so that we too can benefit.

 

Perhaps, it may also be an opportune moment for Mr Chastanet to make broad policy pronouncements on energy and international relations (in keeping with the prevailing economic and political dynamics) instead of his fixation on non-issues concerning Juffali.