Sunday, 29th June 2008
Surcharge to 'more than double'
Oil prices have shot up to a record $142 per barrel.
The fuel surcharge is expected to more than double in the coming days, surpassing the 100 per cent mark, as the government grapples with record oil prices and expired hedging agreements, The Sunday Times has learnt. Local analysts are even warning that the government may impose a threefold increase in the surcharge if the international oil crisis persists.
An announcement from the government is expected imminently, just as many Maltese families turn to electric fans and airconditioners to cope with the summer heat.
Consumers' pockets already took a hit last week when Enemalta announced a rise in the price of petrol, diesel and paraffin. A hefty surcharge increase is bound to add to the financial pressure faced by many as the worldwide crisis takes a grip on Malta.
The surcharge is applied to water and electricity consumption - not meter rental - though around 30,000 low-income households are exempt from paying the additional charge.
The surcharge structure was introduced as a temporary measure in January 2005, when the price of oil on the international market started its upward climb. At the time, the government had said that the surcharge would be phased out once oil prices returned to post-2005 levels.
However, the price of crude oil shot up from $40 a barrel in January 2005 to $93 last December. And it made a further jump this year, shooting to a record $142 this week (an increase of 238 per cent).
According to some indicators, the price of a barrel of oil may even climb to a whopping $200 by the end of the year.
Although Enemalta is not buying all its oil at the current rate, thanks to its hedging agreements, it is still ending up paying much more than it did a few months ago, Finance Minister Tonio Fenech had said.
Speaking to reporters recently, Prime Minister Lawrence Gonzi said the government was studying the possibility of abolishing or radically revising the utilities surcharge mechanism and introducing new tariffs reflecting prevailing market oil prices.
Together with Cyprus, Malta is the most conventional fuel-dependent country in the EU. In 2006, Malta produced only 0.3 per cent of all its energy needs from renewables, the lowest level in the EU. Dr Gonzi has said that Malta will soon be launching a multi-million euro initiative for the development of an offshore wind farm.
Despite the oil crisis, EU leaders ruled out the possibility of intervening in the market by introducing one-time fuel tax cuts. According to the EU, this will not be effective in the long term, particularly as oil prices are expected to continue to surge in the coming months.
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Comments
......................Before talking about windfarms we need better "quickfix" solutions and we need them now.............First of all the Government needs to re-open the Tax Bands in the nxt budget (lets not forget 30,000 don't pay the surcharge, so those badly hit will be the self-employed, business ppl, office workers, teachers, accountants, managers and all those who form the biggest part of the Middle class)......secondly the government needs to give more initiatives with regards to solar panels........thirdly it needs to see that the Malta-Sicily grid project is finalised as quickly as possible................and yes it needs to make sure that all government buildings/projects are "energy saving friendly"..................then yes we'll start thinking of Windfarms seriously and we'll see how financially sustainable this would be
@Raymond Sammut
You are not only obsessed, but you also intellectually unbalanced!
Thallatx il hass mal bass - "mixing up lettuce with flatulence". Actually the Maltese words for lettuce and flatulence rhyme better because they both end in "ass".
Are we so blind that we do not see a major crises unfolding and disaster looming ? Oil exporting states who are greedy and hungry for world power are squeezing and milking the developed economies for political purposes and all the government of Malta can think of is pay up and pass it to the consumer
I do not understand anything about nuclear energy except that it is cheap and that although dangerous can be very safely implemented. Wind and solar energy will never supply is with the right amount of energy so let us stop dreaming and make a bold decision for the sake of our futures.
What about a European energy grid shared by all EU states and fed by privately owned and operated nuclear power stations operating under stringent conditions and supervised by expert organisations? Does that make sense?
Alternative energies has been around since the early 1990 - but who did something to encourage the development of such technologies? Practically very very few goverments. Only now they started talking about it!!! Of course there were reasons not to push forward such technologies! And now we have to pay for their egoism or bad decisions.
Hybrid cars I consider them late in their technology compared to the crises of nowadays. What about energy savings for homes? They have even not yet started!
Well done to all politicians!!! Ahdem Gahan!!
You got some serious issues mate....My love for the government??? Thats a first... Alright, unfortunately you took it literally, because I did not have enough room to say that the government couldn't see this comming because they probably didn't expect the price to go up so quickly. It's the demand, not threats, sceptics and all that. The demand is the problem being met. I have seen god knows how many international news broadcasts about how the demand keeps increasing and that it is getting more difficult to know how much oil needs to be extracted to meet the demand.
I mean we're talking about the price increasing by $10 within a month! Imagine 6 more months at this same rate (I doubt it though), the price could go up to $200 I know the government obviously saw that oil prices would rise....everything rises, but not so soon and at this rate. It's only logical that NOW they are doubling or more then doubling the Surcharge, because they didn't see this steep increase on the price of oil. As I said noone did see a steep rise like this. The government could do a lot more though....I agree. acceleratewindfarmsproject!!.
As regards moners like J A Agius, waiting for the hand out of energy saving bulbs. They should go out and buy them today. Uneffordable? Surveys have shown that low income groups tend to spend a proportionatly higher part of their income on tobacco and lotteries.
Giving up two days a week of smoking or missing out on Super 5 can get you an energy saving bulb.
I cant believe you're so obsessed with your love for this government. Its killing you and you're still happy as can be.
How can you say 'nobody saw this coming'/?? For Christ's sake, has this problem started yesterday? It's been with us for years now. And what did the government do?? ABSOLUTELY NOTHING EXCEPT FOR INCREASING THE SURCHARGE!!
But you seem to be missing the point " Let us be judged by our actions and not by our staements" was what we heard before the elections. The words are there but the actions are also, at that is what is making a lot of people worse off.
What is wrong with an offshore wind farm? Because it has never been done before anywhere, so what then we shall be the first to design it and implement it. What do you think engineers are for, to install other peoples work!..... No wonder there is a brain drain over here... nothing exciting to invent just implement others work!... that is why engineers leave this island for an interesting career abroad!
To such a dream from the prime minister I personally would give it thumbs up especially if he shall employ some Maltese engineers to do some R&D on the project to come up with a sensible idea on how to implement a dream.... You should all know that many good inventions are born out of a dream to solve a necessity!, so we should all support this initiative rather than criticise, and grumble about everything!"
Marcello
No one did? Denmark did. This country is now virtually independent of fossil fuels requirements. Just do a bit of research on Denmark/Wind Turbines. Also, not that the US dollar is now lower compared to when it was in 2005, but that oil as a commodity is now much dearer than other commodities than it was in 2005. There is disagreement as to why it is so. It does not seem to be as you say. There is plenty of this material, and there is lots of machinery for spitting it out. The real cause, some say, is due to "speculators", others attribute it to OPEC members who want to increase revenue before CO2 saturates the atmosphere. Either way, it should be clear that understanding economics can be a bit tricky for guys like Dr Gonzi.
Dear Daniel Bonello
I am as pissed off with illegal immigrants, and even more with those who stick their head up for these illegals, as much as you are, whether we agree or not on other issues. The incident that you refer to is just a small introductory act. We ain't seen nothing yet.
Although I do my best to reduce my carbon footprint, everything seems to be increasing in price.
I wish someone had planned, like the Danes. But when people used to talk of alternative energy, they were categorized as tree-hugging weirdos who didnt know anything about the economy. Wonder what they think of them now... poor fools.
(OR SOMEONE ELSE FROM ENEMALTA, FOR THAT MATTER....)
COULD YOU P..L..E..A..S..E.. EXPLAIN TO ALL OF US, HARD, HARD, HARD, HARD, HARD, HARD HIT TAXPAYERS OF THESE ISLANDS, THE KIND OF FORMULA USED TO SLAM SUCH HEFTY FUEL SURCHARGE AND MONTHLY INCREASES, ON US...!!!!????!!!!????
NO EXPLANATION = NO JUSTIFICATION = MORE SUSPECIONS..!!!
STUPID EXCUSES = STUPID DECISIONS = ARROGANCE GALORE...!!!
instead of investing in SMART CITY / and other capital works . would take a stroll down from Castillja and walk around the TRITON FOUNTAIN and observe the going ons in the transport of this country , run down buses , never on time , rude and crude drivers . and pollution galore .. may i suggest that instead of spending millions of euros in pie in the sky dreams , bulit a decent busport on the site and convert to clean efficeint gas buses ,, then we can start working towards a better . cleaner malta ..
Did some of you leave the planet for the past month?
If more powerful countries are having massive trouble countering this issue....actually the whole world is being effected obviously....why should Malta stand out as the strong country handling the crisis? And should we blame the government for this crisis? Something happening all over the world....
And no.....the world hasn't run out of oil.....we just aren't extracting enough to meet the demand. My god people impress me with the crap they can come up with. The problem with oil is the dangerously massive demand which oil companies are finding hard to satisfy. The demand is just going to keep growing and growing and there is only so much oil extracted and shipped each day. Another thing, the value of the dollar has decreased tremendously....meaning $142 isn't the same as $142 back in 2005. It's a lot less.
Offshore Windparks? Everybody knows that currently there is NO technnology available for deep sea Windparks!
Hedging? How the hell it can be expired? Who is responsible for that? Who played (and lost)with our money?
@Daniel Delia: NO? What are hedging agreements? Long term delivery contracts!
@Paul Smith: "Demand has simply outstripped global supply". The peak oil theory has one big mistake. Currently only 10% of the oil of an oilfield is being brought up to the surface. The rest was just not feasable to bring up. Now with the high prices it becomes feasalbe. We will not experience to run out of oil! But of course we will experience the higher costs!
@Albert: WELL SAID!
If the government doesn't make a move then we're doomed to never resolve this issue. We'll just continue sinking to the bottom. Come on Gonzi, wake up and do something. Introduce alternative energy, track down and eliminate wastes and reward citizens that waste less. And also please, focus your attention on reducing electrical usage from your own departments.
In 1970, Labour stole a Scandinavian idea for building a Parliament House but not a machine capable of exploiting renewable energy. And the neighbour you are referring to is probably the same neighbour that shot on an oil-rig just a few miles south of Malta, a few years later.
The answer is simple, the govt was more busy on how to lead maltese hunters and trappers through fabricated lies and more busy on the hunting issue rather than the true dangerous problems we have mainly illegal immigration whereby last night we tasted a pinch of their behaviour and inflation and high cost of living!
So much for the appealing economic growth!!
Airports will stand as empty vessels a few years from now. Smart City? How about doing something smart about generating electricity?
The last 70 years was the fossil fuel bonanza and it has come to an end, very worrying for human civilization, because we have forgotten how to live without it!
In them days we did things because we did not have the EU dictating to us what to do and how to do things. We took our own initiative and did things in the interest of the economy and not think of one thousand and one excuses to support our wrong doings.
Now we have 3,250 BILLION Euros in National Debt and pay over 254 MILLION Euros in interest alone a year, every year.
Fejn huma l-pagi bhall ta' l'Ewropa marco cremona, because in 1987 our wages were half that in Germany and now they are 1/3 of Western Europe.
Min tnellah b'min? Bil-Laburisti zgur li le! Does one agree with joining EU? It is now irrelevant, but it wasn't Labour, that's for sure.
marco cremona, be reminded that PN have been taking people like you, for a ride, for these last 17 years. Lump it-taxxi issa! I suggest VASELINA!
But we can certainly point our fingers at the goverment for giving a very bad example of how to be energy efficient. The government has been hinting us to do our bit and save energy. But what the government has done in its Departments and Public Entities? Nothing. Government officials are still running lavish powerful cars. No control has been made on the running of gverment vehicles and on their use. The Govt is still lighting Notte Bianca and similiar activities at the citiziens expense of course, etc etc.
And what the Church is doing, particularly during the outside illumination of the village churches during the festas? Just expecting us to contribute for the lighting bills.
Soon? How soon? Both the Indian and the Chinese economies had been projected to grow at a rapidly high rate since the mid-nineties. By correlation, consumption of oil and coal was projected likewise. What have EU planners been doing over the past 15 years? Gordon Brown has only just admitted that recourse to wind power is unavoidable, while Denmark has now become the most advanced in the application of this technology. We have lost so much time. The Maltese consumer will now suffer greatly for this lack of foresight for years to come, perhaps decades, before things can level out again if ever. Just try to think now, how long it will take even just to survey the sea-bed for such an enterprise. I find it difficult to imagine how soon. I don't think Dr Gonzi has got any idea as to what on earth is he talking about. This guy never trained to be a planner or an engineer, obviously, and here he is telling us "soon".
Thank you Mr. Herman Grech. This news gave me a good dose of prudence. I, from now will stop the frivolous use of my car.
I will think again about my consumption habits on every thing. Yes in every thing.
I am not, and will never wait for a politician to tell me what I have or don’t have to do. I will start from now budgeting myself.
Politicians will always talk roses, and if any of them they err (I) pay the price.
Malta's choice was to finance loss making corporations with cash which could have created a renewable energy infrastructure that could by now be supplying 25% of our non transport energy needs.
The government is definitely not promoting a car-culture. It's main consideration is to limit the amount of passenger car imports primarily to reduce outflow of foreign currency on newer vehicles and not for environmental issues.
Government's conflict of interest: Modern passenger car technology and more commuters drawn to an efficient and attractive public transport system reduce the demand for fuel. Reduced fuel demands reduce income from its excise tax and VAT. Reducing passenger car kilometres by 30% will reduce revenue to the Exchequer to the tune of €24million. Further reduction in vehicle related taxes would be expected if an efficient and attractive public transport system was truly in place - more people would opt not to keep or purchase a passenger car. Fewer vehicles on the road would reduce congestion further reducing fuel demands. I would say that Government stands to loose close to €50million a year.
If we insist to think local we will reach no where. This is not an issue of a government. The issue is beyond all this. If we cross the Atlantic we will see
some ‘economic terrorists’ orchestrate the fuel prices, this coupled with some European politics
Two weeks ago Venezuelan president Hugo Chavez was threatening to cut oil exports to Europe in reaction to the new European Union directive on forced expulsion of illegal immigrants.
President Chavez statement was not taken seriously in Europe : since, Venezuela supplies oil mostly to the US... just one percent of the oil of Venezuela goes to Europe. Fair enough. But what if Libya and Nigeria act same way as Venezuela? What if Iran is attacked by the USA or its war agent? (My) Answer: retaliation by Iran - which supplies 4 percent of the EU's energy purchases - would have a drastic effect on the whole Gulf ‘already-flammable’ area, and this would immediately turn the oil price to a four digits price. (Repetition of early 70’s scenario). We must not forget that oil prices prior to October 6, 1973 was 4$ pb)
To be continued later:
Accountable my foot!!!! It is you and me who are asked to be accountable for the smallest mistake that may occur. We must grow up and stop licking most of our politicians and must refrain from aiding them to put their mistakes under the carpet.
If the hedging of oil was a good thing, the person/s responsible to do away with hedging must be held accountable for their decision, because in the long run it is you and me who are paying through our nose for their political mistakes.
Politicians should be there to think and rethink on what to do in an inevitable crisis. They should have foreseen this crisis. What did they do? Nothing!! Or next to nothing!!!
Dear politicians(sic), people out there are hurting really bad. They are striving to make ends meet. If you are unable to ease our aches and pains, please make way for others. We have had enough.
Malta is completely dependent on oil for electricity (and water) production. Renewable energy production is the lowest in Europe (and I also question the 0.3% figure...I do not believe it is more than 0.1%). As recently as 6 months ago we had energy and resources Ministers Ninu Zammit and Austin Gatt, and MRA (the energy authortity) rubbishing renewables. It seems that they have gone silent on this issue now. The MRA national energy saving campaign failed to take off. Government recently decided to stop giving rebates on energy efficient appliances - one of the few tangible successes in this sector.
We are also completely dependent on the private vehicle for transportation - because politicians promoted a car-culture to the expense of the public transport system.
Politicians must be held accountable for this crisis.