Having regard to the strong propensity for riots to
break out when taxes on gasoline products are increased
in Jamaica, it is not surprising that the mere mention
of a review of the petroleum tax regime has sparked
instant reaction.
Dennis Morrison
Over
the past 30 years there have been three such riots
that have shut down the country for several days each
time: first, in January 1979, then in the mid-80s,
and again in April 1999. Ironically, in both 1979
and 1999, petroleum prices subsequently rose by multiples
of the tax increases, without a murmur, as international
factors overtook us.
The
Opposition's initial reaction to the Green Paper on
Energy Policy has focused on issue Number 10 which
refers to the need to review the petroleum tax regime.
Notwithstanding this, one is hopeful that as Opposition
leader Bruce Golding has indicated, that party will
fully engage in "constructive discussion"
on the key elements that should be incorporated in
an updated energy policy framework for Jamaica. It
is also important that the consultation process should
incorporate major stakeholders among the private sector
and civil society groups.
The
Green Paper actually sets out 31 policy issues and
outlines preliminary recommendations in each case.
These cover mega topics such as energy supply and
security, which in today's jittery geo-political climate,
particularly in oil-producing countries, is a matter
that is of paramount importance.
It
further sets out policy directions that must be fully
explored, as we seek to modernise the electricity
sector and ensure efficiency in its generation, transmission
and distribution. Obviously, the current legislative
framework within which this sector operates is in
serious need of an overhaul, having regard to the
fact that the Electricity Lighting Act dates back
to 1890 and the Electricity Development Act to 1958.
With
respect to the transport sector, the major issues
(and these are ones that every conscious nation is
mindful of) include greater use of diesel-powered
engines, reduction of motor-vehicle engine size, introduction
of bio-fuels and the use of flexi and hybrid vehicles.
For
environmental reasons, it is urgent that we replace
the octane enhancer, MTBE, with ethanol, a bio-fuel,
which is the common substitute. Of course, by using
ethanol as an enhancer, we will be creating a linkage
between the local sugar industry and our transport
sector. Flexi and hybrid vehicles are becoming popular
in a number of countries, including the USA and Brazil.
The flexi vehicle uses a mix of gasoline and ethanol,
while hybrids integrate gas engines and electric motors
to provide power.
Flexi... uses a mix of gasoline and ethanol
With
the influx of private motor vehicles since the advent
of import liberalisation in the early 1990s, many
people have come to regard public transport as no
longer vital. In fact, our transport statistics show
that in 2004, approximately 75 per cent of the rolling
stock was private.
But
we cannot ignore the reality that public transport
is a more efficient means of moving people and goods
and therefore, as the Green Paper suggests, a better
balance has to be struck between the two modes. If
we are in any doubt as to the wisdom of this, we only
need to reflect quickly on how transport is organised
in some of the most advanced societies.
It
is in the area of transport that great thought and
care ought to be exercised in considering the appropriate
policy tools which can be used to encourage the shifts
that are needed in our energy consumption patterns
and efficiency in using hydrocarbons.
Tax
incentives are one of the main tools used and, equally,
high duties are applied in order to influence consumer
choices in terms of vehicle engine size and fuel types.
The matter of the petroleum tax regime ought therefore
to be partly seen in this context because we cannot
ignore the role of pricing policy in influencing the
demand for gasoline and other products, even as consideration
has to be given to the overall tax burden of the population.
The
suggestion has been made on a number of occasions
that a parliamentary committee be set up to examine
policy issues relating to the energy sector but, to
date, this has not happened. Meantime, it should be
abundantly clear to every citizen of Jamaica that
there has been a radical shift in the global energy
demand/supply balance that is forcing every country,
including ones that have energy resources, to find
new strategies to cope with the new situation. Jamaica
is no exception and we must wake up to that reality
sooner rather than later.
Dennis Morrison
writes for the jamaica Observer. Petroleumworld
not necessarily share these views.
