Mark Micallef
No plans to reduce surcharge
Consumers should not expect cuts on the surcharge levied on utilities despite plummeting oil prices, the government said, pointing out that the cost of crude is still higher than what had been paid when the surcharge was set at 95 per cent.
"The expectation that the recent relative decreases in the price of crude oil on the international markets should lead to an immediate reduction in the 95 per cent surcharge rate are not justified," a spokesman for the Infrastructure Ministry said.
The declaration comes as oil prices return closer to double digit figures than they have been since last February when prices surpassed the $100 threshold for the first time, eventually peaking at $147 on July 1. Since then, prices have been falling steadily, hovering again close to $100 a barrel in recent days.
Despite the drop, the ministry said the subsidised rate of 95 per cent surcharge rate announced at the end of June was based on Enemalta's fuel costs for the period April to June. What is more, the corporation now has almost hedged all its fuel requirements for this year and half of its fuel storage for 2009.
When asked when fresh deals will be made, the ministry said the corporation is continuously monitoring prices by a specially-set up risk committee.
The nominal surcharge rate for the period had worked out at 160 per cent but was reduced to 115 per cent through hedging agreements, which the corporation had entered into. Eventually, the government decided to reduce the rate further to 95 per cent.
The 95 per cent rate was based on the price paid by Enemalta for its fuel oil and gas oil purchases and not on the crude oil prices. The average price of crude oil for the period was $121.95.
"Any subsequent review of the surcharge rate will be worked out on the real fuel costs borne by Enemalta from the beginning of July. But it should be clear that, at current international oil prices, an expectations of cheaper electricity are simply not realistic," the spokesman insisted.
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Joseph Schembri
Sep 15th 2008, 11:24
While on the subject of vehicle fuel prices I would like to know why the price of biodiesel is only marginally lower than that of normal diesel and it's price goes up with that of the other fuels. Its price does not depend on that of fossil fuels, so why is it so expensive? I have been using a 70/30 (fossil/ bio) mix for my car for the past year or so only for the environmental benefits but people should be given a financial incentive as many are still wary of using biodiesel.
carmel dimech
Sep 14th 2008, 10:25
HOW ABOUT SOMEONE ASK IN THE NAME OF CUSTOMERS RIGHT ,HOW MUCH PROFIT DID THE IMPORTERS AND THE GOVERMENT MADE ,SAY IN THE LAST 5 YEARS ? I GUESE THAT THEY WERE ALWAYS ON THE RISE LIKE AS OUR EXPENDICTURE. PROBABLY NO OFFICIAL REPLY,BECAUSE OF BUSSINES CONFIDENTIALITY AND MAY BE HIDDEN PROBLEMS.
Mark Piscopo
Sep 13th 2008, 21:55
Thanks Dr Gonzi we love to pay the surcharge and we will continue to vote for you.np
pulio Ellul
Sep 13th 2008, 18:52
I think that the goverment is fed up on making high prizes, because when the prize of something goes up like petrol in the morrning you go as early as possible and you will buy the oetrol with the new prise. that 's not far,But the salery is not like the Ewropeans because he always says that we are Europeans.
P.Schembri
Sep 13th 2008, 18:18
Ahleb, Gonz, Ahleb! But it's getting drier by the minute!
David Pisani
Sep 13th 2008, 18:12
What about Polluters pay principle? Its easy for the government to leave everything as it is. He just wants to collect money from lower, middle and working class people and the rest are capped or else have enough money to consume without any caution for energy saving.
Simon Swartz
Sep 13th 2008, 16:05
WHAT ABOUT PETROL STATION FUEL?!!!!
Like Mr Aquilina said, fuel is still high at petrol stations and unless they are using oil bought at $146 I think that the price is ,and not should, be reduced immediately!!
R. Aquilina
Sep 13th 2008, 14:47
What about the price of petrol and diesel at filling stations. The mechanism here is to adjust the price to the cnsumer in line with market flactuations, in fact prices were changed within 48hrs as everyone will recall so why aren`t prices dropped accordingly now? Don`t confuse these fuels with heating oil fuel at the power station ,the price of which is hedged for periods of up to 6 months. Can anyone explain maybe Enemalta?
James A. Tyrrell
Sep 13th 2008, 14:40
@Mark Tonna. It's interesting that you should point out the fact that Enemalta buy up to six months in advance as this is the same as happens with companies in Britain. What I can't understand is why when the price of crude oil goes up the increase at the pumps is passed onto the motorist, not in six months time but practically immediately.
On the other hand when as is happening now the price of crude drops all the motorist gets are a lot of excuses as to why petrol prices are not following suit!
I Abela
Sep 13th 2008, 14:31
Some History for some of you: In the old days, Mintoff used hedging agreements for oil purchases so that our country would not be exposed too much to market fluctuations. PN geniuses used to say that this is going to cost us MILLIONS should we make a bad deal. Until finally they removed it. Then after some time they re-introduced it !!!! Now the government made a VERY bad deal, buying oil for more than it actually costs. And we citizens now have to bear the costs. WOW viva PN.
Now please don't tell me that government was right because nobody could predict where the Oil prices were heading. Many, Many, Many people knew including myself (and I have been writing in these blogs about it for months). If you know why oil prices RISE than you should also know that a reversal in those instances would make oil prices FALL. That is how the market works, and the market gives indication of where it is heading. I don't expect the average citizen to undestand the market, but I surely expect the person in charge of spending our MILLIONS to understand it.
A.Vassallo
Sep 13th 2008, 13:56
We those who pay surcharge should be told when Eenemalta buys its oil and t at what price. In this way we can easliy make our own calculations when and how much the surcharge would be since the last purchase was made.
J Farrugia
Sep 13th 2008, 13:09
Oil price dropping??????? At 100 dollars per barrel? do you know that OPEC (Iran and Venezuela on the forefront) has decided to stop production so that the oil price will once more top the 150 dollars and more? Do you know what's happening in Texas USA? do you know what's happening in Bolivia, in Russia and in Indonesia? So why are we talking about dropping in price of oil? or about things which do not enter into the oil equation (elections etc)? This is reality not elves work! And I wonder where are all our top economists? Why these 'economists' (sic) do not agree between themselves about the way forward in oil purchases is a mystery to me.
Manuel Mifsud
Sep 13th 2008, 13:06
The increase in the price of crude oil was the direct result of demand being higher than supply. Through the resulting higher costs of energy products there was a decrease in demand thereby resulting in a decrease in the price of crude oil. Now it is obvious that if the cost of electricity, petrol etc, goes down again, there will be another increase in demand with the result that the price of crude oil will go up again!
The solution is to continue paying the right prices for energy products derived from fossil fuels thereby doing a good service to the environment, at the same time, governments should seek alternative sources of clean energy. Moreover, money which would have gone to subsidise electricity and petrol should be given to everyone in the form of cash, e.g. an increase in the amount of annual bonus. In this way everyone will be free to use the extra money in whatever way they think best.
Marie Abdilla
Sep 13th 2008, 13:04
Only in Malta! The Italians are up in arms justifiably saying that if the price of oil goes down so should prices for consumers. But not in Malta! We just sit around like a pack of sheep mesmerized by Gonzi's smile and let ourselves be hoodwinked! he he he!
Mario Camilleri
Sep 13th 2008, 12:31
So when the price of oil was around 70-80$ a barrel and the MLP suggested a hedging agreement, loads of Nats bloggers wrote that it was a mortal sin or 80's style politics! Our brave government made a hedging agreement when the price of oil was over the 120$. common sense suggests that you hedge when the price is low and not when it's sky high.
Joseph E Briffa
Sep 13th 2008, 12:15
There was a time when the price of fuel used to be reviewed every month and the price to the consumer adjusted accordingly.......this doesn't seem to apply anymore. Why? It's true that we are in the post elections period and therefore the administration doesn't need to ingratiate itself with the voting public, but let's not forget that MEP elections are only a few months away and the PN must brace itself against the risk of getting only two seats as happened last time. I would strongly urge the administration to revise the fuel prices downwards in the light of the 32% drop in the price of crude. The UK has just reduced the price of petrol and diesel, so why should we be the exception?
L. Coleiro
Sep 13th 2008, 12:03
Another promise gone with the wind!!!
Mark Tonna
Sep 13th 2008, 11:30
Mark..it all depends at which price was the oil purchased..it is well know that enemalta buys around 6 months in advance..
L Galea
Sep 13th 2008, 10:08
Seems that the law of gravity that what goes up must come down does not apply in Malta.
Mark Spiteri
Sep 13th 2008, 10:07
An increase in the surcharge as oil price went up is justified (might is right).
A decrease in surcharge as oil price went down not justified as well ? (again a case of might is right)
R.Gauci
Sep 13th 2008, 09:52
Of course General Election time just passed 6 months ago!